The Effect of Price on Your Brand
I had fun “garage sailing” over the weekend. I was gobsmacked at one house to find a butcher’s knife for $90, Chico’s pants for $35 a pair, and wine glasses starting at $16 per glass! The owner’s response when I walked out empty-handed was that she was charging approximately 80% of the retail value and didn’t I see the value?
Aha! We are back to the concepts of value and context. When I’m at a garage sale, I expect at least 80% off. If I’m at Tiffany’s, the sterling silver key ring looks like a relative bargain at $150 because the average price of an engagement ring is a startling $10,400.00!
Your Brand = Price + Positioning + Perception
If you set your prices as an entrepreneur at garage sale levels, it’s going to be virtually impossible to raise them. Your pricing locks you into a certain brand position. You can’t, for example, easily transition from coaching at $99/hour and then jump to $500/per hour. You’ve already set the perception that you’re a $99/hour coach.
Further, you don’t want to race to the bottom. Trying to be the low-cost provider is a long-term losing proposition; it works for Wal-Mart because they make up the margin in volume.
So, let me ask you: are you positioning yourself as a Tiffany’s or for a garage sale?
I’m always open to hear your views.