For many marketers, product pricing is an after thought. To launch a product, marketers work so hard on the branding, creative, promotions and product placement. After all the long hours, sweat and tears many marketers pull a number out of the air and pray the pricing is right. Pricing is typically thought of from only a profitability perspective, but the price carries a message as well. It signals to the buyer the value of your product. How many times have you heard a salesperson say, “We didn’t get the deal because of our price?” This is an indicator that your product’s value proposition, price and product attributes are sending mixed signals to your buyer. These three components, a messaging trinity, must work together so buyers will believe in your offering.
Pricing is not just a finance thing. It is a real marketing tactic that impacts how your audience perceives your brand. Get the price wrong and you can lose your shirt while unintentionally damaging your brand. “What?” you say. Humans crave consistency and sending mixed messages has real financial implications. The reality is your audience is looking to this little number to evaluate your product. To avoid information overload, the brain creates shortcuts to help process information. Many buying decisions are made in as fast as 2.5 seconds. The price maybe the second impression of your product, but get it wrong and you’ll turn buyers away.
What’s your first thought when you see a Louis Vuitton bag for $50. Most of us, would say, “It’s obviously a fake”. The price does not align with the brand’s image. The price is as important, if not more than the sexy copy you spent hours on. In today’s world, there are so many products and features for consumers to consider, the price is the ultimate buying signal as it defines the value of your product. Let’s dive in and create a winning pricing strategy.
Getting the Price Right
For a moment, put away the pricing calculator and think about your pricing from a branding perspective. To evaluate your messaging consider the three components in the messaging trinity – the product’s value proposition, the price and the product’s attributes. The product’s value proposition is what your brand stands for. It is your promise. It differentiates your product in the marketplace. It’s why consumers buy your product instead of your competitors. The price is what you charge for your product. But, the price is more than a financial transaction, it is the value assigned to the product. For many customers, it’s the final communication before the buying decision is made. The product attributes are the deliverables. It’s the payout. It is what your customer receives for their dollar. The product attributes can be concrete, such as Italian leather or abstract, such as handmade.
Three Simple Steps to Evaluate your Messaging Trinity
Each component of the messaging trinity must consistently reinforce the same message or the buyer will poke holes in the product’s selling story. It only takes a few simple steps to evaluate your messaging trinity.
Step 1: What is your product’s value proposition? How does your company differentiate your product from your competitors? Consider the words in your product’s marketing copy or mission statement that define your product. Find monetary or value based words such as low price, discounted, fair, premium or exclusive? These words define the expectations your buyer has for your product.
Step 2: Once the product’s value proposition has been defined, consider the message your price is sending. For example, if your product’s value proposition is the low price leader then your pricing should deliver on this promise. If it does not, the price is off message and some adjustments need to be made.
The brain determines value based on what it has previously experienced. Buyers will use known benchmarks to evaluate the price. Benchmarking can be as easy as a Google search. But when it’s not, consider the information your buyer has been exposed to. For example, if you are a service company, what other types of services is your prospect already using. Are any of these services similar to your offering? Are these other companies’ offering project management or a creative output similar to yours? You don’t need your direct competitors’ rate cards to be in the right ballpark. Use what you already know about similar industries and make some assumptions. There are parallels across multiple industries that can help you evaluate your pricing.
Step 3: Determine if your product’s attributes align with the value proposition and price. Is your customer receiving what they expect? If the brand proposition is quality, the workmanship should be flawless.
Start your evaluation by creating a list of your product’s attributes, include both concrete and abstract offerings. Think about offerings that go beyond the product itself. For example, do you offer free shipping or a no questions asked return policy? These are also attributes of your product that buyers will value. Then review your list and look for the consistencies with your product’s value proposition and price. Any outliers are red flags and should be evaluated. Next, look at the list from a big picture perspective. How many items are on your list? And does that align with the price? Over delivery is great, but offering everything and the kitchen sink might be killing your value, as well as your profit margin. Adjust the list so it is in balance with the price. You can always upsell additional services in the future.
Evaluating your messaging trinity and making the necessary changes will put your product at a distinct selling advantage. I’d love to hear how the messaging trinity is working for your product. Tell me in the comment section below.
Onward and upward! It’s time to close more deals!