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wellbeing · 12-06-2007, 04:21 PM

This is a topic that's near and dear to my heart as I'm in the retail business, so please let me add my 2 cents worth.

I agree that one is able to engage in the type of pricing that OP is asking about if you are able to communicate the value of paying that price. It happens every day in the world of luxury or "designer" goods. For instance, someone above mentioned water, something that I (as are the people in my city) am fortunate to get readily, inexpensively and of good quality with a simple turn of a faucet. A good example of a commodity, right? However, just down the road from me is a corner market that sells a simple 750 ml bottle of water for almost $8 and can't keep it in stock! I find this particularly interesting because a) this cormer market is not a luxury market by any means (quite the contrary) and b) they stock almost 2 dozen, similarly-sized, lower-priced, heavily mass-marketed bottled waters. Somehow, because this particular company has convinced its Customes of its values, they are willing to pay its price over the competition. (I don't know if the pricing--by the company--is cost-driven {i.e., a mark-up of their costs} or value-driven {"we think our water is worth $8] but I'd guess it's the latter.)

That's what marketing really is: letting consumers know the value of your product to them.

I am on the front-line of the seachange in retailing that many people have described above. Thanks to the web and other factors, the number of competitors for my retail shop has expanded from those similar stores within driving distance to the entire country, if not the entire world. It's a different way of doing business these days than it was 10 years ago and that's always disruptive to companies. I see on a daily basis Customers who come into our store, "pick our brains" and then decide whether to buy from us or leave. It's our job to provide them with enough reasons to buy from us; sometimes, we're successful, sometimes we're not. I would argue that, by factoring in the broader competition of the web and all, we are now more prepared to provide those reasons to our Customers. I know of many local businesses who have not changed their tactics and are less prepared and experience the increased frustration of Customers going elsewhere. (A perfect example being described above.)

But back to the OP, you're a bit fortunate as you are not in a strict retail business (i.e., selling a good) but in a service business. Web and non-local competition has made fewer in-roads into many service sectors than they have into retail sectors. Another good thing is that service (because it's dependent upon the individuals creating that service) is very difficult to "knock off" so if you can create competitive distinctions other than pricing, you could well retain those distinctions for quite some time.

As you create those distinctions, I would suggest that you realize that those distinctions may "select" some Customers for your service (and some Customers for your compeitors). After all, not everyone wears "designer" clothes or sips $8 bottled water. With value-driven pricing, you just need to convince enough of your target Customer base of your value to fulfill your budget.

(An aside: Somewhere in this forum, I remember reading a story about Joe Vitale charging $25,000 to write a single marketing letter for his client. My take on the story was he structured his business so that he didn't need tens of thousands of clients for his letters. Do a search, read the whole story/thread and see what you take away from it.)

Since we're in the I-M section of the fora, remember the LoA works best from a mindset of abundance; that there is plenty for everyone. So Customers for you and different Customers for your competitors. Create your competitive distinctions to attract the Customers for whom you're best able to provide value.

Oh, and one of the things we've found out is that when a Customer comes into our store, picks our brains and leaves, we may have lost the short-term sale but, in our experience, they invariably refer to us Customers to whom we can provide value. I wish for you a similar or better experience.

Good luck to you. I hope this helps.

12-06-2007, 04:21 PM	#7 (permalink)
wellbeing Senior Member Join Date: Nov 2007 Posts: 172	This is a topic that's near and dear to my heart as I'm in the retail business, so please let me add my 2 cents worth. I agree that one is able to engage in the type of pricing that OP is asking about if you are able to communicate the value of paying that price. It happens every day in the world of luxury or "designer" goods. For instance, someone above mentioned water, something that I (as are the people in my city) am fortunate to get readily, inexpensively and of good quality with a simple turn of a faucet. A good example of a commodity, right? However, just down the road from me is a corner market that sells a simple 750 ml bottle of water for almost $8 and can't keep it in stock! I find this particularly interesting because a) this cormer market is not a luxury market by any means (quite the contrary) and b) they stock almost 2 dozen, similarly-sized, lower-priced, heavily mass-marketed bottled waters. Somehow, because this particular company has convinced its Customes of its values, they are willing to pay its price over the competition. (I don't know if the pricing--by the company--is cost-driven {i.e., a mark-up of their costs} or value-driven {"we think our water is worth $8] but I'd guess it's the latter.) That's what marketing really is: letting consumers know the value of your product to them. I am on the front-line of the seachange in retailing that many people have described above. Thanks to the web and other factors, the number of competitors for my retail shop has expanded from those similar stores within driving distance to the entire country, if not the entire world. It's a different way of doing business these days than it was 10 years ago and that's always disruptive to companies. I see on a daily basis Customers who come into our store, "pick our brains" and then decide whether to buy from us or leave. It's our job to provide them with enough reasons to buy from us; sometimes, we're successful, sometimes we're not. I would argue that, by factoring in the broader competition of the web and all, we are now more prepared to provide those reasons to our Customers. I know of many local businesses who have not changed their tactics and are less prepared and experience the increased frustration of Customers going elsewhere. (A perfect example being described above.) But back to the OP, you're a bit fortunate as you are not in a strict retail business (i.e., selling a good) but in a service business. Web and non-local competition has made fewer in-roads into many service sectors than they have into retail sectors. Another good thing is that service (because it's dependent upon the individuals creating that service) is very difficult to "knock off" so if you can create competitive distinctions other than pricing, you could well retain those distinctions for quite some time. As you create those distinctions, I would suggest that you realize that those distinctions may "select" some Customers for your service (and some Customers for your compeitors). After all, not everyone wears "designer" clothes or sips $8 bottled water. With value-driven pricing, you just need to convince enough of your target Customer base of your value to fulfill your budget. (An aside: Somewhere in this forum, I remember reading a story about Joe Vitale charging $25,000 to write a single marketing letter for his client. My take on the story was he structured his business so that he didn't need tens of thousands of clients for his letters. Do a search, read the whole story/thread and see what you take away from it.) Since we're in the I-M section of the fora, remember the LoA works best from a mindset of abundance; that there is plenty for everyone. So Customers for you and different Customers for your competitors. Create your competitive distinctions to attract the Customers for whom you're best able to provide value. Oh, and one of the things we've found out is that when a Customer comes into our store, picks our brains and leaves, we may have lost the short-term sale but, in our experience, they invariably refer to us Customers to whom we can provide value. I wish for you a similar or better experience. Good luck to you. I hope this helps.