When
you’re considering your pricing there are many important factors to
consider – value, positioning, your return and more.
But there is another that often goes unattended and that’s this:
never forget the very importance of ego! What this means when we’re
talking about pricing is that some people will pay more simply because
they have large egos! And you could be missing out on opportunities that
come from actually increasing
your prices.
Let’s
review a couple of little examples to see why that’s true.
Some
people WANT to buy the most expensive …
The
first one comes from a real-live session with a business development
client when a Results Accountant was working with the management team to
define a ‘Unique Core Differentiator’.
One
of the managers suggested something along the lines of "our UCD is
we're more expensive than the competition." I asked him to expand and
he said "we have some customers who insist that when they buy a new
TV or music centre from us, we bring it in a van with our company name on
the side. One time, all the vans were out and we delivered it in an
unmarked van so that she would receive her goods as quickly as possible.
She refused to take delivery and insisted we take it back to the shop
until a marked van was free! She wanted the neighbors to see that she
could afford to buy from us…"
That
point led to them stocking more elite lines such as Bang & Olufsen,
which subsequently sold very well.
A
winery triples its sales when it doubles the price.
The
second example comes from a wine magazine. There is a winery in the Napa
valley called Caleda. Their Reserve Pinot Noir used to be rated among the
best in the US, and often fared well against the best French Burgundies.
The
owner of the winery has started to notice that his winery is no longer
featured in "best of…" lists, and his sales have started to
fall.
He
did a study of the wines that have overtaken his and are being recommended
by the experts and found that they were all more expensive than his wine.
So this year, he has increased the price of a bottle from $38 to $71. He
wrote to his regular customers explaining precisely what he was doing and
why. Guess what has happened-his sales orders have TRIPLED, despite almost
doubling his prices!
Now
this doesn't say much for some wine drinkers perhaps, but it does
illustrate the point about ego rather well.
