Build a Solid Price Culture
Hi!
I’ve been kicking it on holiday the last few weeks in Toronto, NYC, and London.
Today, I’m coming from you on the road to Boston.
I came across this piece by Trung Phan.
It is about writing for yourself.
It reminds me of a Don DeLillo quote, “I write to figure out what I think.”
Anyway.
I’ve been keeping a Microsoft To-Do list of ideas to think about and write about and something people ask me about a great deal is creating the right pricing culture.
Let me start by defining what I mean when I say “Pricing Culture.”
Your pricing culture is the combination of the approach you take to set your and how you execute that price decision.
It is part philosophy, part action.
How do you build a health pricing culture?
Establish a Point of View:
Are you a value brand?
A discount product?
Premium?
Whatever.
Establish it from the jump.
Who are you?
What do you stand for?
What kind of offer are you going to make?
Enforce the mantra: “Pricing Demands Research”:
This is true of all of your marketing and branding decisions, but you owe yourself the focus on research when setting your price.
Without research, you are set yourself up for some of the failures of pricing:
“I know…” and this can be about what the customer will pay, want, or need.
Your sales team can offer the objection, “They NEED a discount.” Or, “We are just priced too high.”
You pull your price out of thin air.
Setting the right price means going into the market, understanding the customers, and pricing according to what the market is telling you…nothing else.
Follow a Pricing Method:
This is likely to require some trial and error.
Pricing well requires practice.
What you should have in place are some guidelines that help you turn your research into a price that’s built on:
Perceived value
Customer need
Brand & marketing support
Communicate Your Price Effectively:
This is big because it is easy to try and hide from your price.
It can feel like an aggressive move to state your price.
A key framework to pricing success is the 3 Ps of Pricing:
Process
Price
Promotion
You need a good process.
You set a price.
You promote it.
If you don’t promote your price properly, you’ll likely struggle.
Enforce Price Integrity:
It is easy to discount.
It is easy to make concessions, “Just this once.”
It is easy to fall into the trap of assuming that what you value is what the market values.
All of these are problematic.
Because you aren’t the customer.
Your opinion doesn’t matter.
Price is the first and easiest objection. It is often irrelevant.
The big key, to have a healthy pricing culture, and enforce your price integrity.
This doesn’t mean you never discount or cut your price.
It means that every decision is made following your process.
No pricing decision is made as a one-off.
To recap:
To build a solid pricing culture:
Establish a Pricing POV
Do your research
Have a method to your madness
Promote your price
Keep your price integrity
Let me know if this makes sense.
Hit reply and tell me what’s good!
Dave