For small or large businesses, raising prices (or setting the right price) is always a hot topic. You don’t want to undervalue your service, but you need volume, too.
Before you start researching market rates and the psychology of pricing, the place you should start first is with your brand.
Say what?! I know, it sounds odd at first.
At a prior global brand I worked on, the brand was well known in China. Because of good prices and product, the company built up a great reputation through word of mouth. Once they caught on, they invested even more in a brand presence with this market on WeChat, Weibo and other Chinese social platforms.
Meanwhile, the same reputation did not exist in the US. Reputation was not as well known, and the investment in growing brand awareness was not as conscientious over time.
When product and prices declined due to external factors, which market did better? While we certainly heard about the decline in competitive pricing from the Chinese market, it was much more insulated from these factors than the US. That market was much more likely to continue buying from the brand they trusted and had an established relationship with, even if it meant paying a bit more. Conversion rate was still higher than the US market, and they were more likely to find other products to buy from us as well. Their lifetime value remained higher.
If given two choices, a potential consumer is very likely to go with the brand they know and recognize over a no-name brand, even if the cost is a little higher.
Why is this? Brand is so hard to measure, so how can you trust this is true?
Because when you sell only on price, it’s a very volatile game. Prices and markets fluctuate and there will *almost* always be someone cheaper than you.
But when you sell on value and on an established brand, you can justify prices. Why can Apple continue to charge more than the competition? Because you can actually deal with a human being if you have an issue. Because they stand by their products. Because they stand by diversity and humanity. Because it’s not about price, it’s about value. Apple has invested significantly in building their brand to stand apart with clear differentiators that make it worth the extra money to stick with them. (Even after it comes out they deliberately reduced your battery life!)
You’re not Apple. I know. But you can still clearly communicate what makes your brand worth paying more for if you know how. You can still invest in brand on a limited budget so at a local, regional or even international level you chip away at brand recognition and recall to increase your conversion rates. And I can help you with Brand Development and Part-Time CMO work to keep you on track.
And once you have that brand story and recognition down? You’ll be able to justify your higher pricing with clarity and conviction. Then watch your margins increase…