How much should you charge? Ask your brand.
A question was recently put to us that essentially went like this:
“How should we deal with it when a potential customer says, ‘Your competitor quoted me a lower price’? Do we negotiate? Do we call their bluff? Consider whether our pricing is fair?”
Well, in short, the basic answer is that this is not a money question. It’s a positioning question—therefore, a branding and marketing question.
A branding question, not a money question
If your competitor is truly your competitor, then yes, to consider lowering your price is a legitimate option. But if you and ‘your competitor’ are not offering the same value, 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 it’s telling them—right or wrong—they’re going to believe it.
Example: If a consumer goes to Apple and says, “I can get a smartphone at the corner store for $29.99, and it comes with prepaid minutes,” what should Apple do? Should they negotiate, call the consumer’s bluff, think about whether their iPhone prices are fair?
Well, let’s just imagine together how Apple might respond in our fictitious scenario: “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; the very value that phone provides is that it’s inexpensive. The value our iPhone provides, by contrast, is quality and usability. Therefore, valued consumer, if you’re looking for inexpensiveness, we heartily encourage you to purchase the prepaid phone, and good for you and the corner store. But if you’re looking for quality and usability, the cost will be what the sticker says.”
“Your branding is telling people what your product should cost. And whatever it’s saying, they’re believing it.”
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 cliffside 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 it 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.
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.
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.
“When your branding is accurate, it will actually say ‘no’ to the wrong clients and attract the right ones for you.”
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 the $29.99 prepaid phone is going to call Apple and say, ‘Hey, you guys better cut me a deal or I’m going to the corner store.’ Yeah, right. That’s delusional and everyone knows it. They’re going straight to the corner store as soon as they get paid.
So, what’s the moral of the story? 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.
Still not sure about branding or pricing?
If you’re constantly having a hard time with potential customers trying to haggle over price, it may be because you’re sending the wrong message. Contact us today and mention this article, and we’ll give you a free 30-minute consultation and see how you can improve your brand—and, as result, get better leads.