2. The Road to Recovery: Discounts for Opening Day?!
Big Ideas:
- The fastest way to destroy your brand is through price-based promotions.
- “Discounts Are For Dummies” is my trademark statement.
- There are many ways to avoid dropping a discount on Opening Day…that’s a new one, actually.
With this one, I’m in you see something new everyday territory: a 45% discount on Opening Day.
Obviously, as soon as I saw this one, I said to myself, “One piece of the newsletter, sorted.”
Pricing is the thing that most businesses seem to struggle with the most. I talk about it pretty consistently and I still see people just throwing discounts all over the place like it is going out of style.
The challenge with so many of these ticket discounts is that if you look at the face value of the ticket, even when you apply a 50% discount, the ticket is likely overpriced.
This means that you do three pretty terrible things from the jump:
- You crater what demand you might have had because your market sees you throwing out a discount early in the sales process and begin to consider the question: “How low will they go?”
- You undercut your brand because research and experience have taught me that the fastest way to destroy your brand is by using price-based promotions. You become a discount brand and that impression stays with you for years, that’s the scientific research of neuro-marketing which is the study of how your brain responds to marketing stimuli. (They will study anything.)
- You kill your profitability. For every 1% in discounting you do, you lose somewhere between 10-40% of your profit.
I’ve tread this ground many times before. So I’m trying to think of a new angle to offer you.
So I’m going to give you 10 tips on better pricing:
- Price=Value. Name something that you buy regardless of the price.
- Price is about perception. Why do you buy an iPhone?
- Demand isn’t created by the cold hand of the market unless you are a commodity. You aren’t a commodity, are you?
- Price can indicate quality. Think Smythson until they started discounting all the time.
- Price can give a sense of prestige to a product. Think Rolex.
- Bundling can get you a higher price. Again, perception of value.
- Unbundling can get you a higher price per piece. Think about single ticket sales versus a full season ticket. You get the higher price point from your single-game sales, yeah?
- Price is a signal. No one hires the cheapest consultant.
- Don’t base your pricing on your competition. The truth is that you probably don’t even know who your competition really is.
- Do some pricing research. Experimentation, conjoint studies, A/B testing, the Van Westendorp pricing survey…whatever, just do something besides sticking your finger in the air and hoping that you make the best guess possible.
Put this to use:
- Find out what your customers value. You aren’t your customer.
- Do some pricing research. Find out what value your customers put on different things.
- Experiment with your pricing, bundle, or unbundle things besides the ticket.