How To Market The Price
Of Your Products And Services
by Tom Egelhoff
One of the most common questions I get from either start-up or established businesses is, "How do I price my products?"
The short answer is marketing.
I have an ongoing debate with some local realtors that a good real estate marking firm can make a house worth more than any other home around it regardless of size, appraisals or other benchmarks of value.
Everyday we hear stories of people spending ridiculous sums of money for all kinds of common products or services.
Is anyone reading this article willing to shell out $400.00 for a haircut?
Nevertheless people do it every day in some parts of the country. It's not the cut that demands the high price it's whose doing the cutting.
Is Starbucks Coffee really worth four times what a regular cup of coffee costs? Or is it just the perception that their marketing has created? And therein lies the message.
If you think about it there are hundreds of products and services that you felt were ridiculously priced the first time you heard about them. The "Pet Rock" comes to mind.
Features And Benefits
The first lesson any advertising student learns is that in advertising you stress the benefits of the product or service not the features.
It's not what the painting is of that makes it valuable it's who painted it.
A sedan has four doors. A feature. So what? The benefit is that grandma can get in and out easier; there is more room for the dogs and kids.
To the right market that means convenience and life is better. So when you sit down to decide what you or your product is worth, the marketplace only dictates the price if you allow it to do so.
My new years resolution for last month was to join a health club, which I did. I could very easily save the $700.00 dollar yearly dues by walking, doing sit-ups, push-ups and aerobics at home.
However, at home I'm not disciplined to do those things or I would already be doing them.
So I'm not paying to exercise I'm paying for someone else, in this case a trainer, to whom I must be accountable.
I'm not paying for the health club I'm paying instead for an emotional benefit that I seem to be unable to provide for myself.
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Positioning Your Price
You may be thinking that this looks good on paper but how can I ask more than my competitor for the same service?
Let's go back to the haircut analogy I used above. I pay $18.00 every three weeks or so to my barber not $400.00.
My barber could ask $400.00 and he would lose me as a customer. But he might gain several people happy to lay down $400.00 for his services.
The point here is that you target your products and services to those people in a position to pay for it and present them with the benefits that make the service worth the price.
Is this easy? Of course not. But when you begin to think in these terms and construct a plan it seems more doable.
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Is It Logical?
This brings us to the final thought for this article.
Here is the rule; "When emotion and logic come into conflict emotion always wins."
As much as we would like to believe that we look at things logically before we buy them we do not.
Does "impulse buy" ring a bell? Did you ever buy a CD to get one song?
Human beings make emotional decisions then create a logical argument to support that decision.
So I put my house on the market this week for half a mill even though its been appraised at around $180,000.
What makes it worth so much more? Simple I will have lived there.
When I'm a rich and famous author you can charge the tour buses that come by.
I've got a waiting list already.
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© Eagle Marketing PO Box 271, Bozeman, MT 59771-0271
http://www.smalltownmarketing.com - (406) 585-0219
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer. He may be reached at 406-585-0219 or PO Box 271, Bozeman, MT 59771-0271
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