Pricing | Unskippable - Marketing Keynote Speaker - Jim Kukral

Category Archives for "Pricing"

$1 For Air?

My tire got a little bit low the other day so I stopped by the local gas station for a fill-up. Here’s what I found.

iPhoto

Yep. $1 for air.

Obviously that price is over the top for me and I’m guessing you as well. Sure, I MUST have the air, and they know that, so they can charge whatever they want, however, to me that price is outrageous and I’ll never go to that gas station again because of it.

There are a couple of points at work here.

#1: Luxury vs. Need
There is a definite difference between selling luxury items and need items and how you can price them. I NEED gas to get to work. I NEEDED air so my tire wouldn’t pop. When you’re selling needs, you can price pretty much how you wish, assuming you don’t have a competitor offering a lower priced choice. Because of this, I was forced to pay the $1.00 to get my tires filled up, even though I believe the price was too high.

The other side of this equation is selling luxury items. Water is a need, but bottled water is a luxury item. In other words, you don’t HAVE to have bottled water, but it’s nice to have. In this example, the people who sell bottled water can again charge way too much for something we don’t really need to have.

Are you selling luxury or needs? Really think about it. Then price accordingly. But be careful, read point #2.

#2: It’s Easy To Create Customer Evangelists & Even Easier To Lose Them
Just because I paid the $1.00 for air does not mean the gas station wins. In fact, they lose, big time. I will now purposely not go to that gas station for gas or food or drinks or anything, ever again. Why? Because they’re greedy. Why not make the air free? It’s air! If the air was free I’d remember that and make sure to go there more often. I’d buy my gas there and other things. I’d always remember that they gave me something I needed.

Think about the little silly things you charge customers for that you should probably be giving away for free. The barber should probably include the hot straight-razor shave at the end of every haircut. The restaurant should probably make kids drinks free instead of $2.99 on top of their meal.

Consider these examples:

  • What if a restaurant charged for salt/pepper and ketchup and mustard?
  • What if your mechanic charged you to read the magazines in the lobby while they changed your oil?

How much money are you really making from selling these extra things? Isn’t it possible that your customer is wondering why you’re trying to gouge them for every single little thing? At what point does your customer get fed up with this system and decide to take their business someplace else? How much revenue will you lose long-term because you’ve lost that customer?

These are important questions and thing to consider. Don’t charge $1.00 for air.

Greed=Failure

If you’re going to charge more for your product/service, then you better make sure you deliver more. I’m constantly amazed by how greedy business owners can be. They work so hard to build up a brand that people love, and when the first sign of success hits them, they scale back and raise prices and make their product not as good. That’s pure greed.

Here’s a tip. You can raise prices, fine. But you can’t scale back quality at the same time.

Restaurants do this all the time. My family used to frequent Boston Market all the time as a Friday night dinner spot. But the franchise decided to both raise the prices, and cut portions… all at once. So you tell me. Why in the world would I continue to eat there? I don’t.

Look at the businesses in your neighborhood who have lasted for 20+ years or longer. Those are the ones who realize that once you build a brand and find success, you can raise your pricing here and there, but you absolutely can’t lessen the quality of the product you serve.

Are you guilty of this? If so, you’re not going to be in business very long. The rules is this: If you raise prices, make sure you raise quality or quantity as well. This is true in any online or offline business. It’s the classic upsell and downsell argument.

For example, if I offered you coaching services at $50/month. Then a month later reduced that price to $25 to all new people. The people that paid $50 are going to pissed off, assuming I’m selling the same coaching product.

Now, if when I reduced the price, I also reduced the features… well then, that’s not the same is it? It works the same way when you raise the price.

So if I raise the price, I should add features. Your customer will continue to trust you if this is the way you practice. Otherwise, they’re going to feel like you cheated them.

Long-term success comes from consistency and fairness to your customer.

Never Price Yourself Too Low

One of the biggest mistakes I’ve made in the past was pricing myself and my services too low. Whether that was for a consulting or speaking gig, I’ve always found that I get more gigs when I price higher. The video below talks all about my experiences in pricing myself and my services.

Just remember that perception equals reality. When you send in low prices, the perception is that “he/she might not be worth it” or, “they’re prices are low, so what I’m going to get in return is going to be junk/cheap.” That’s bad for you. Never, ever, price yourself too low!

What’s your experience with pricing? Got any stories to share? Leave a comment or do a video and send me hte sharing site link and I’ll embed it here!

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