Chapter 16 This is Marketing
Price is a Story
Pricing isn’t just a way to get money but it is a very powerful marketing tool.
There are 2 things that you should remember about pricing, when you are about to tell people how much you are going to charge for your product.
Marketing changes your pricing.
Pricing changes your marketing. Seth Godin
As people will develop their observations and assumptions based on your pricing and your pricing determines what people want to believe about your service, your positioning is critical. Your price should be in accordance to your positioning claims.
Price drives a lot of emotions. It’s an extreme and within this extreme are stories and connections. The price determines who we are designing our product for and what we stand for and the stories we are about to tell. And it also helps us to create or eliminate margins that will help us in our outbound marketing.
Your price is a signal. For some it should be constant while for others it can change according to variables. Constant pricing works as an efficient alternative as well because you don’t have to decide on a price again and again whereas there are some brands where their whole structure is based on different pricing on different variables.
Uber and Ola are subject to variable pricing 0therwise their brand model doesn’t work. Whereas FMCG brands try to stabilize their price throughout because it works as their identity in the market.
It’s the story telling that matters when you are pricing your product and not the price. What story you are telling that will convince your customer that the price they are paying for is justified and suitable? What is the story of your price?
Being the cheapest isn’t the right way to decide on your pricing. It just means you are scared. You aren’t there to promise change but you promise a similar product that is cheaper. There’s no connection or emotion attached to it, it’s just cheaper. Cheaper is the last resort when you have run out of all your ideas.
Then comes the thought of making it free. But do you really want to do that?
The Scarcity, tension and enrollment all vanishes and you can’t invest in your product when you decide to provide it for free.
Maybe you can correspond your free idea to your major idea. Because free idea spreads quickly. Sometimes it works. But you should remember that you won’t be able to make a living if you give everything away.
It’s is better to combine the two: the free ideas that spread along with the expensive expression of those ideas.
You are listening to a song for free online but when you have to download it, there’s a premium price you have to pay.
There are numerous ways to share your ideas, your stories to the world for free. These help you to build awareness and trust by giving you a platform to sell something that’s worth paying for.
People believe that it’s rational to spend a lot on a product when we trust them enough before making a transaction but on the contrary when we spend a lot there’s a feeling of trust entwined in that transaction already.
Why do high end restaurants or luxury brands survive all the bad media?
Because the people who have spent their money on them, trust them. They have a name because of their pricing. So if your price is less, it doesn’t make you more trusted, it has an opposite effect.
You have to be generous with the change you are making. Your customers want you to care enough about changing them. For that you need to create tension that will put your work in forward motion and to pull it off you have to charge more than you think.
Understand that your story isn’t for everyone nor is your pricing. It’s for the right people whose experience you are going to change.
At the end, there are 4 questions you have to answer when you are going for the pricing.
Who’s it for? What’s it for? How’s the status changed? And what will I tell the others?