The price you put on a product or service is largely inconsequential. The real deal is the perception of the customers on the specific amount. This is where the social science of pricing moves into physics.
Yes, two salespeople can introduce the same product to the same customers, and each of the customers will come out with different perceptions of the product price.
In other words, the best Pricing Power is creating perception which will move the customers, without necessarily adjusting the actual price of the product. In other words, how do you make a product seem “cheap” by not actually reducing the actual price but through perception? But note: it goes beyond being “cheap” to affordability since something could be cheap and still not affordable.
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Of course, customers are smarter as they model price on the expected desired value from a product or service. So, to shift the equilibrium on your side (as a seller), you need to help them discover the value your product or service offers. If you do that, one key thing happens: you will overcome any inertia which has prevented them from buying from you. But do not fall on the illusion that it is the absolute amount that matters. What is going on there is evident: even at that price, what is the value of the product for them?
This is why most times I tell Learners in the Tekedia CEO Program not to just go into adjusting prices. Rather, explore how to add more value or create intangibles which will make it harder for your product to be compared with others, because you have fully differentiated in many ways. For example, if competitors submit reports, you ask to submit and then appear to take questions from the constituency, even if that reduces your margin. When customers see that you are attentive, they model your value vector differently and that means more pricing power for you.
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Well, there are two things that could help, first is how effectively you can communicate the benefits. It’s benefits that most times tip the scale. The second is positioning as a niche. Whenever you give the impression that your products and services are for everyone, you will struggle with pricing. Every speaker has his/her audience, and so must your product…