How to pick the right price? §
- Price to Value discrepancy
- Customers will buy if the value they are getting is perceived higher than the price they are paying
- Virtuous cycle of price
- Don’t do this
- Look at marketplace
- Take the average
- Go slightly below to remain “competitive”
- Provide what the competition provides but with a “little more”
- End up at a value proposition of “more for less”
- The problem is that you end up giving more for less money and the business eventually fails
- The solution is to increase your prices
- High Prices = High Value
- Charging higher prices makes the perception that your product or service has higher value
- GOAL: be so much more expensive that the consumer must paus and think “this cannot be the same category of solution as everyone else” thereby making you a category of one
- When you are starting out
- Just sell one product 0 to 1 million business
- Introduce second product line 1 to 3 million
- Instead of having different price point products, adjust the payment terms per customer
- Wealthy - pay entire fee up front
- Well off - Pay in two to three payments
- Poor - increase payments (more payments they make the lower the monthly/weekly payment)
- People will look at their monthly payments and not the total price of the product or fee or the total length of contract
- Strategy:
- Instead of charging $99 per month
- Charge an upfront fee 500andthemcharge99 per month
- This will help you make more faster and help you cover any costs to get the product sold