These 3 stories fit together in my mind:
- Disney raising prices on streaming services.
- Uber makes first profit.
- WeWork on the edge of bankruptcy.
Why?
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Because these 3 all teach us the dangers of underpricing/introductory pricing or scale for the sake of scale when you don’t know whether or not a customer actually values your product/service enough to bear the full costs of purchase.
It all goes back to the basics of pricing:
- Good pricing deserves research. The idea that Disney doesn’t have the mix of marketing/pricing/streaming down is crazy. Instead, what is more likely is that Disney is struggling with finding a way to get the prices back to where their research told them that they needed to be to be profitable.
- Price = Value. If people don’t see the value in a product/service, they won’t pay the price. People loved Uber as riders and drivers when the service was heavily subsidized and riders were getting cheap rides and drivers were getting stronger wages. When they flipped, the service became less attractive. It is now more challenging to acquire and keep customers.
- Raising your prices is really freakin’ hard. WeWork has found that out because part of their restructuring and recovery plan was about righting their price structure along with cutting costs. The challenge is that for many customers, the value wasn’t worth the cost. Or, people had found something that they valued that filled the role that WeWork was playing in their lives…which goes back to the top about researching your market.
I’m going to talk about this on my next FREE webinar: Set the Right F!@#$%^! Price…