Getting the price right for your products or services is key if you are to survive – let alone thrive – but how do you achieve this?
Most businesses reverse-engineer pricing – put simply, they work out how much it costs to buy and / or assemble the raw materials or goods, factor in other indirect costs (e.g rent, power etc) and then add a profit margin. This approach is widely accepted and, although its a reasonable start, it is fundamentally flawed.
There is a far better way. But it’s harder as it takes imagination. It also requires that you step away from the safety of the herd.
1. Customer experience = Customer value (Price)
YOU should not dictate YOUR perceived value (aka price) for YOUR goods / services onto me as a customer.
Think about it – if you start from the perspective of:
YOUR cost of purchasing goods + YOUR rental (+ other indirect costs) + YOUR perception of the ‘right’ profit margin = Price
then you completely miss MY (all important) customer perception of value. There’s far too much of you as the business in this equation and too little about me as a customer. This is exactly where most businesses go wrong – and ultimately end up in a price-war because they’ve no other competitive-edge.
What if you could:
- Single out the aspects of your service or product that are unique or different?
- Make it a pleasure to deal with you.
- Change the rules.
- Focus on those aspects that your competitors are blind to.
- Ask for my opinion.
- Be a game-changer.
- Ask for feedback and suggestions for improvement (and act on them).
- Engage me as part of your community.
- Support me and the initiatives and interests that are important to me.
How could this be different for your business?
Clue: me (+ lots like me) will become blind to your price and loyal to you + your business. Trust me.
2. Potential for exponential growth
Once you’ve cracked point 1, the (ingrained) correlation between YOUR costs and price become disconnected. This is key.
- Now your price is determined by your customers.
- Your customers determine the market value and this has nothing to do with your ‘behind the scenes’ costs or how hard you are working. This is irrelevant (and quite right too!).
- Value and therefore price is driven by customer experience.
- This makes the competition irrelevant.
- The rewards for being the best in your market are disproportionately high.
- Combine this with the fact that technology opens your market to practically six billion + customers
and you have the recipe for exponential growth in your business.
Cracking No.1 is the hard bit. But its worth it. What the world needs now is Soul Businesses that deliver exceptional service like no other. Its an open goal…