Brand and pricing

Pricing is a complicated “art”. As anyone scratching their heads over the mysteries of an airline price that can vary by hundreds of dollars from one day to the next, for the same seat, on the same plane, going to the same place, can attest.

• What price “should” a product or service be?
• What’s a fair and reasonable profit margin?
• What is the added value of a retail shop versus an online store to justify a higher price for the same thing?
• When is it okay to hold a sale or cut the price?
• What happens if my distributors cut the price of my product?

The questions could fill a blog all by themselves.

Here’s another way to think about it. The price you charge for something is a promise. You will get this product or service for this amount of money. At the heart of that exchange is a set of understandings that have been set up in the sales and marketing process. What those are will depend on your brand.

So when you start with the premise that your price is a promise, then use your brand as a filter to set the context and decide what promise you are making, you’ll have a starting point for your price.

You can add and subtract from there but at least you will be doing it deliberately and not just throwing a dart at a board or merely copying competitors pricing.

And before I get comments telling me I am downplaying the role of competition pricing – yes of course they are part of your consideration and there are any number of resources out there who can help you with that kind of analysis. A new online service called Pricing Prophets is worth checking out if you need that kind of help.

However, all advice and market considerations aside and as an advisor of mine once memorably told me, the “right” price is what a customer is willing to pay. For example, a handbag could be $20 or $20,000 – same functionality, very different promises.

In the case of the Qantas “price promise“, the promise they talk about is not a promise at all but a “qualified guarantee” that if you find a cheaper ticket after you have bought one on qantas.com they will match the cheaper price – of course it is a low risk guarantee to make as there are not many customers who, after making a purchase, will sit and check out other prices.

But that’s another blog.

See you next week.

Michel Hogan is an independent Brand adviser and advocate. Through her work with Brandology here in Australia and in the United States, she helps organisations make promises they can keep and keep the promises they make, with a strong sustainable brand as the result. She also publishes the Brand thought leadership blog – Brand Alignment. You can follow Michel on Twitter @michelhogan