A question sometimes put to us that essentially goes like this: ‘No one wants to pay what we’re asking for our product. How do we deal with pricing, and how can we know what to charge?’
Well, in short, the basic answer is that this is not a money question. It’s a positioning question—therefore, a branding question.
A Branding Question, Not a Money Question
If your competitor is truly your competitor, then yes, it is entirely legitimate to consider lowering your prices in order to offer a better value.
However, if you and ‘your competitor’ are not offering the same thing, then they’re not you’re competitor, and either A) your potential customer is delusional, or B) you have a major problem with your branding, because it’s your branding that is telling people how much your product should cost.
And whatever your branding is telling them—whether your product is the cheap product or the expensive product—and whether that’s right or wrong—they’re going to believe it.
Suppose a consumer goes to Apple and says, “I can get a prepaid smartphone at the convenience store down the street for $29.99.” What should Apple do? Should they negotiate, call the consumer’s bluff, think about whether their iPhone prices are fair? Should they sulk because no one wants to pay their prices?
In actuality, their response would probably go something like this: “Well, we certainly would love for you to be an Apple customer, but we’re afraid you may have misunderstood the situation. You see, that prepaid phone at the corner store is the ‘inexpensive’ option. In other words, the very value that phone provides is inexpensiveness. The value our iPhone provides, by contrast, is quality. Therefore, valued consumer, if you’re looking for inexpensiveness, we heartily encourage you to purchase the prepaid phone, and good for you and for the convenience store. But if you’re looking for quality, the cost will be what our sticker says.”
“The value that phone provides is inexpensiveness. However, if you’re looking for quality, the cost will be what our sticker says.”
You see, the real issue at stake is not money, but the character and nature of the product. The question isn’t about pricing, but positioning. If my product is the ‘quality’ product (as opposed to the ‘inexpensive’ product), and the message of my branding is consistently making that clear, then the consumer’s out to lunch, end of story.
Consider, again, the iPhone: Apple never said they were offering inexpensiveness, and the inexpensive product by nature of the case is not Apple’s competitor. Sure, they’re both phones, but they’re competitors in the same way that the million-dollar, cliff-side estates are competing with economy apartment complexes. They’re not.
And how do you know that? Because, in both cases, their branding told you so.
Whatever Your Product Is, Say So and Price Accordingly
Businesses need to be clear about the kind of product they’re providing, and then they need to be clear about saying so. If it’s quality, say so. If it’s the cheap, say so. Then price accordingly and stop worrying about it.
Now it is precisely at this point that branding comes in. Telling people what they should expect to pay for your products or services is exactly the place of your branding. Because guess what? If your branding says “I’m the quality product!,” that’s what people are going to hear (and believe!), and customers who are looking for the quality product are the ones you’re going to attract.
In the same exact way, when your branding says, “I’m inexpensive!,” that’s what people are going to understand, and the people you will attract will be the ones who are looking to pay as little as possible.
Don’t get us wrong. Both products are fine. We love them both. The 99¢ burger meets a need, and so does the $16 gourmet burger. We love business and we ain’t mad at either product. When someone looking for a cheap burger finds one, everyone wins. When someone looking for a gourmet burger finds one, everyone wins.
When your branding says, “I’m inexpensive!,” that’s what people are going to understand, and the people you will attract will be the ones who are looking to pay as little as possible.
All we are saying is this: Know what kind of a product you have, then say that as clearly as you can, and price accordingly.
Good Branding Attracts the Right Clients and Turns Away the Wrong Ones
A curious thing happens when you know exactly what it is that you’re doing and the value of it: You’re able to say ‘no’ to the wrong clients without losing a wink of sleep about it.
In fact, you won’t have to say no to anyone, because your branding will do the talking for you. It will say ‘no’ to the wrong the clients and attract the right ones for you.
Which is exactly what Apple’s branding does, right? Think about it: you know as well as we do that no one who’s looking for ‘cheap’ as it’s reflected in the $29.99 prepaid phone is interested in an iPhone. In other words, he’s never going to call Apple and say, ‘Hey, you guys better cut me a deal or I’m going to the convenience store to buy their phone.’ Yeah, right. That’s delusional and everyone knows it—even our cheapskate. He’s going straight to the convenience store as soon as he gets paid.
So, what’s the moral of the story? just this: Pricing is a positioning question, and positioning is a branding question.
So how much should you charge? Ask your brand. You’d just better hope it’s not telling lies about you.
Interested in Attracting Customers That Pay What You’re Charging?
If you’re constantly having a hard time with potential customers trying to haggle over price, it just might be because you’re sending the wrong message. If that’s the case, contact us today, and let’s get to work on building a brand that attracts the right kind of customer.