One of the interesting ways to get myself thinking and pondering is always to suss and read other business blogs.
Not only do I get a lot of ideas but I also get to understand how other people in other parts of the world think particularly when you read the comments section.
One post you should try reading is this Harvard Business Review blog post called “Are Your Prices High Enough?”
Yes, did you do a double-take?
Are your prices high enough?
Not low enough.
Why You Should NOT Go Low
In business, most people think that the lower one’s prices, the better it is right? Unless you are Tesco or Carrefour and run on volume sales, it probably isn’t the best way to market your products and services.
I read the post and found myself agreeing completely that it is a placebo effect.
Would you feel better carrying a Birkin or a Coach or some pasar malam bag? Most women I know would complain that the prices are so damn high BUT…. “you can never argue with the finishing and quality of a branded bag”.
Add that to the wondrous pleasure of toting a branded item, getting your girl pals to gawp at it from afar and feeling ultimately like you are the queen of the world, what is a little price tag anyway?
In the world of pharmaceuticals (says the blog post), the more you pay, the better you feel.
You automatically are better the moment you swallow more expensive medicine compared to some no-name medicine.
According to the blog post, it seems that the more you pay for something (dinners, cars, homes, diamonds, bags, furniture, etc.) the more pleasure you get out of it because you expect it.
Never Use Price As Your Value
So what does this mean? It means price is never a factor if you want something BAD enough.
This reminds me of the story of an Australian dentist, Paddy (who has been quoted in so many of the books I read). He was an overworked and stressed dentist.
One day, Paddy decided he had had enough and would trim his patients to a manageable lot and just service those few people.
Before he did so, he wrote a letter and mailed it to all his patients explaining what he was about to do.
And he was also going to raise his fees and figured he’d service a small pool of patients. He expected his business earnings would drop. Shockingly, his earnings went up because everyone who heard his story clamoured to be his patient!
Was he better at extracting teeth? Better at fillings?
He just made himself highly exclusive (it helped he sent out a letter to all his patients announcing he was no longer available to all and sundry but only to a few patients).
Just like why we’d buy a Tiffany diamond instead of something cheaper.
The Point of Difference is the Value
And how does one show value?
In all good marketing, there’s a story to be told.
Tell the story well enough and you can justify your prices (after all, like I said, price is never the factor anyway). So for business owners who still think that claiming to be cheaper will win customers, I say, sorry but you are so mistaken! You will be forever known as cheap (and that connotation sticks around like some bad smell).
Don’t believe me? Ask yourself, how many times have you justified to yourself the purchase of a new item? A new dress? A new car? A new computer? The emotional pleasure and attachment supersedes all logical arguments. Later, only later, will we try to logically justify why we had to have it. (Especially if our other half wants to know why his credit card bill has a few ‘extra’ credit billings in it!)
Agree or disagree? I’d love to hear your point of view.