Wednesday, August 19, 2009

Bake Your Price Point @ 350 degrees, Check For Doneness- Insert Fork

Not that I'd know anything much about cooking, but I do know about business. Tony loves to tell the story about my Easter ham.

"You know how you put cloves in a ham? She figures, if some is good, more must be better! So she inserts about thirty five of 'em and cooks this pre-cooked ham for four hours! Have you seen a forest after a fire? You know how the trees are all charred? That's how those cloves looked. That was her ham. Yeah. I remember that Easter."

During a business meeting last year with Keith, he made a statement regarding my new start up: "Be very clear about where your price point is."

There's a few ways to do this-

(1) Skimming

You set your price so high that even if you missed twelve sales, the one makes up for it.

I think this is a really bad idea even if you do manage to come out with some buyers. Your integrity in the marketplace is grossly compromised. Have you heard the saying, "Pigs get fat, hogs get slaughtered?"

Last night, a weird and threatening thing happened.

I needed to make an important call, and after searching in vain for a quiet spot to do so, I was forced to go outside because the music was too loud.

It did occur to me, before taking that route, that I'm outside at night by myself. But I reasoned, well, it's probably okay because I'm right by the door here and it's well lit. I made my call.

"Hey you! You're fabulous. You're totally fabulous!"
Uh, okay... Mr. Drunk Guy. I'm still on the phone and watch him escort his wife? Girlfriend? to the car. She drives off and leaves.

He comes back and brazenly sits down beside me on the stone bench-leaves only about four inches between us.

"Hold on a minute, Linda."
"You're hot."
"Yeah? Lemme show you something." I hold up my wedding ring.
"Aww, you're married."

I begin to access how much danger I could be in. I begin to decide what violent course of action I'm going to take when he becomes embolden enough to touch me. Okay, he's a little short. Good. He's drunk. Good. He's wearing glasses. Good. But I decide to further hedge my bets and psychologically slow him up.

"Do something for me. Go back in the bar and look for a really big black guy in there. That would be my husband. He's insanely jealous." (He's never jealous because he knows there's no reason to be, but Mr. Drunk Guy doesn't know that.)

The point is, after I got the situation under control without using a head butt- this man's price point was completely inflated! Dude, no one's going to be interested at that price- even if I was available.

(2) Competitively Priced

Understand what the market is commanding and adjust accordingly. This is what I like to do and feel the most comfortable doing. Where I am going to stand out, is not so much my price, but my stellar service. This is why I win clients back year after year and my client base is strong and solid.

Also, there's been many times when my customers thought that they'd have to buy more- but we point out- no. If you need more, you can buy more, but let's wait and see if you need it first.

I've never had one customer that didn't appreciate that. I've built a lot of loyalty that way because what I want them to see is not my greed, but my integrity. (Pigs get fat, hogs get slaughtered.)

Always make it right and always make it easy for your customers to buy.

(3) Priced Too Low

A promotional, introductory discount can be a good thing- but when your company is priced too low or giving away items just so the customer will buy- the effect that can have is very negative.

What's wrong with it? What's wrong with them? Why do they have to stoop down to that level to drum up business?

In the final analysis; ultimately you're going to set your price relative to one thing: what does the market command? Because it's the market that ultimately is the determiner of your success.

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