Get Pricing Right: Stop Trying to Sell Everything to Everyone
Getting pricing right feels difficult at times. Repeatedly, we aren't clear enough on who we're selling to and what we're selling. We get stuck in a vicious cycle of trying to sell everything to everyone.
This video is the first in a follow up series from the last blog: the Top 10 Reasons Businesses Struggle with Pricing. I wanted to go into a bit more detail on each of the items. Today we look at reasons one and two
- Unclear target customer
- Not clear or have the wrong focus on what you’re selling
Who Are You Selling To
Why is being unclear about the target customer so detrimental to pricing? People pay very different prices for the same thing. Stop for a moment and consider the range of prices people pay for water, coffee or pens. It's kind of mind blowing. Then think about why there are so many different prices - VALUE. Real or perceived, value is the differentiator. The perception of value comes from...THE CUSTOMER!
When you're targeting everyone, narrowing it down to the "right" prices feels impossible. At one end, you're leaving customers out (price too high). At the other end you're leaving money on the table (by not charging enough). That's why when you try to price for everyone, it gets so difficult. You're trying to find one perfect number in a massive ocean of possible prices. YUCK!
When your target group is specific enough and well know, you can more easily narrow down the price ranges. Consider the amount of money college students have to pay for things. Also, they value things in a different way then other groups. Prices are different than if you're targeting mid-level executives with your offers.
Not only are the prices different but so is what you offer.
What Are You Selling
Right up there with being unclear on who, is what. I've seen two ways we get in trouble here. The first, is when we're caught up in designing something cool. Too often we get lost in the excitement of creating products. We design something that's overkill. It doesn't meet the needs of the customer.
For example take engineers (I love you guys and I am one by schooling). We're great at designing new, cool things; of achieving new engineering feats. But, just because it's cool doesn't mean that it'll solve the customers needs or deliver value. The problems have to come from what customers need or want; not from us creating something cool.
The second way this shows up is when we aren't clear on who we're selling to. When we don't know who, we can't identify the "real" problem. It's hard creating a solution for a problem that's not known. In fact, doing so is something we call luck. At best you'd be guessing. At worst you're creating something that doesn't create value - hard to price.
Getting Pricing Right
Getting your pricing right is impossible when the customer and the offer are unclear. Let me put this another way. It'll get easier when you are clear who you're targeting with what. It's easier because then it's easier to identify what value it brings them.
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