You could be losing hundreds of thousands of pounds or dollars per year
Did you know that price is often your customer or client’s biggest buying discriminator in the absence of clearly distinctive B2B product or service?
Far too many business directors and owner-managers say they understand the power of pricing, yet they continue to lose hundreds of thousands of pounds per year.
Can you guess which of the price points below was more profitable?
Throughout my professional career as a marketer, I’ve witnessed a £997 price point out pull a £597 price point in terms of customers by 50% and a £99 online solution out-sell a £69 solution by 1.5 times to one. The directors of these businesses were kicking themselves because for years they stuck to one price point leaving money on the table. They lost a fortune in the process – don’t let that be you!
I’ve seen a world leading business school add over £1m in additional revenues over 3 years simply by increasing its prices. The product remains the same, but this school was smart, very smart in fact because it closely tracked market and competitor trends.
My Advice? Always Be Testing Your Prices.
Your prices are only correct when your prospective and existing customers perceive them to be right. The ‘correct’ price is usually the one that most clients respond to at the maximum profit possible
Case Study: Test and Market a Winning Price— the Story of an IT Training Company
A few years ago, I worked with a high-growth potential start-up. It was a software-as-a-service company that was selling one of its product lines, a prestigious IT certification via e-learning, for £199 and was averaging 40 units per month.
Over 18 months, the price rose to £1,199, and sales increased by 50% to 60 units per month.
At the lower-price point, customers were thinking that this price was too good to be true and were probably put off by the low fee. Consequently, as the fees rose, the proposition became more ‘believable’, and so clients were prepared to invest money into this e-learning channel.
The message here is clear: if this company did not engage in any market price testing, then they were losing money without even knowing it.
