Think of pricing, understand value

Pricing is definitely a careful issue that you should study deeply. Price interferes heavily with our VALUE perception. The first thing most people ask in the first place is – what price? Mentally we create our notion of value highly based on price, if a product has not enough apparent quality or the service reveals itself low, we could think of a price that is not suitable because is not aligned with the rest of the value components and offer that we build in our minds.

Moreover, all depends on your market – each person’s perception of what value is all about is different, I can be willing to pay more than other person for the same tangible solution, or the opposite, and the fact is that there are many companies that still start on their cost & profit mentality, instead of thinking first on which price will their target market be willing to pay for.

There are plenty of other factors such as your competition, current economical condition, third party’s influence, etc .. that affect the decisions of price sensibility in your market and which you have to assess, but even though, what you really should think of is the whole value proposition and where your pricing should be aligned with.

Easily resuming, I quote Seth Godin:

“Your sales force and your customers may scream that you need to lower your price. It’s not true. You need to increase your value. If people don’t want to pay, it’s because you’re not delivering enough value for the money you’re charging. You’re not selling a commodity unless you want to.”

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Three rugged basics

Across the street of an hotel in Indonesia there is a restaurant with good food, pleasant environment and a key person who welcomes everybody who gets in. This key person gives away thousand smiles and says goodbye in your home language when you go away. Probably it is able to keep the restaurant reasonably full on everyday basis. Price is on the average – it is not expensive according with the surronding average pricing and all seems good, specially when the food is quite tasty. 

On the other hand, all goes bad when it turns out the tasty food to be very scarse. Maybe their vision on the business model is to save on the food to save costs, which is one of the worst strategies they could come up with. To complement, when this key person is not at the restaurant, the employees seem to act worst and take orders without any attention to the client, specially with the customers that often go to the restaurant (perhaps taking them for granted).

All this reasons finally result in a break of a everyday relationship, and which actually has lead to find a more friendly, cozy, cheaper, and higher quality food restaurant. 

What to take from here:

1. Sympathy is not a item to be used or sold. If you’re not natural, don’t pretend – its worst, but you should deliver sympathy on your service together with attention.

2. Value means many variants surrounding your product and service. Don’t price average and deliver low. If you deliver low and price low, at least your customers will expect that from you, and if they like, they will stick.

3. Monitor your employees and treat them as your first client. They are the only and most important link to your customers. 

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Take the best of others

When reviewing strategies, every company should cross over different industries and take a good look on what different players are doing in different business.

Tourism is an industry which reflects a careful focus on determined key points – service, details, relationships. Hotels have to manage well the expectations, promises and service they offer. If the customer expectations are not reached at the first point, theres a huge chance of everything falling down straight to complaints and to a viral bad reputation which you never know at what extent can become. If the opposite occurs, each customer becomes amazingly powerful promoting the hotel to their network.

If you notice carefully, this happens with any product or service within different industries. The extent the consumer talks about it, is yet not well determined, but surely the buzz goes out to the closest network and then spreads to other network till gets bigger and bigger.

Nowadays this fact is not big, is huge. With Internet, people write and comment constantly with a scale to millions. They review and analyze single details you never think of. They start conversations that turn into deep based statements against a brand if that is the case. They also become fans of your brand if you connect with your consumers. 

The fact, is simple. Nowadays you have to get permission to talk with your market, you have to please them and be able to deliver quality in every aspect of your brand, that includes your product and the service you offer. Nowadays, you better look at what others need to do to survive and to exceed (such as tourism industry), and review how you’re perfoming to probably  – shift and change.

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