Pricing Strategy: Perceived-Value Price (or even ‘No-Price’ at all!)

By claire |

the_price_is_right__1_Posted By: Sumontro Roy,

Price is one of the four major elements in the Marketing Mix and getting your price-point right is critically important for a variety of reasons:it is a leading cue to your customers about your positioning, the starting point of your ROI and determines the degree of profitability that you enjoy.

Inaccurate pricing could potentially have hugely damaging effects on your business: under-pricing prevents you from realizing your true profit potential whereas over-pricing might cause you to lose customers. From the Porters Five Forces perspective, over-pricing and super-normal profits would likely attract competitors that want a share of the pie and could drive down your (and industry) profits faster.

Obviously, you need to consider many elements in making this decision, including customer perceptions of your offering, the competitive landscape, the stage of the industry life cycle and your own strategic and profit objectives. Based on your unique requirements, there are different pricing tactics that you could adopt.
One of these is Perceived-Value Pricing, where you fix your price-point based on what your customer is willing to pay for your product/service. Your customers will determine this based on their perception of the value that you provide and how you measure up against competitive offerings.

In a recent article, restaurant owner Sam Lippert of Kettering, Ohio took this concept the whole distance – to fight off the recession, he asked his customers to pay whatever they thought the meal was worth! A risky strategy no doubt, given the challenging times that we are in, but the gamble paid off – business is up in a big way, with “daily sales and customer counts having risen by 50 to 100 percent!”

Learning: Never stop innovating, or be afraid to explore new ideas…good ideas can drive business growth, even in recessions!


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