I’m trying something a bit different today by going for the “riff” technique that Tom Critchlow suggests.
Lately, I’ve been thinking about some of the mistakes that businesses make when they set their prices. This has come up because I’m planning out a workshop for small businesses/freelancers and other pricing folks for London in May.
Here are some of the common reasons I see that come up repeatedly:
- No connection between the marketing strategy and the price as a tactic to deliver that strategy: Strategy before tactics. You have to know why you are setting the price the way you are before you can set a good price.
- No process in place: Again, so consistent. There’s just no process in place to collect data, understand the market, and set a price. It is like pulling things out of thin air.
- Haven’t connected the value of the brand to the price that can be justified: Your brand can help support your pricing decision, but if you don’t have a strong brand it is going to be hard to justify a premium or, even, fair price.
- Lack of price frames: You can’t just drop the price into the middle of the room and expect that it is going to be gobbled up. Price framing is one of the key skills that would set someone apart as a strong marketer with pricing chops. If you frame the price correctly, you can often justify a much higher price due to positioning your product/service against something that might not be the regular point of reference.
- Not understanding the value that is created at a gut level: I say gut level because you need to trust your value at the deepest level and be able to sell that to a wider audience. If you just think about “value” as a commodity and not as something unique that you deliver, you can find yourself shut down and pricing like a commodity.
- No understanding of the market and the target: STP is a pricing person’s friend. You see the market. You pick a target. Your price should reflect that.
- These are just top of mind things…what do you see when you see pricing mistakes made?