Product, Price, Place, Promotion. The classic 4 Ps of marketing strategy we’re taught on any marketing course. And yet in so many businesses, the Pricetag decision is often left to finance or sales. It’s not seen as creative enough to involve marketing.
And yet Price is probably the most powerful P. The price you charge not only determines your profitability but also communicates what’s really true about your value proposition.
Deciding on the actual pricetag is discussed a lot. Too cheap you run the risk of your clients undervaluing your services (and also risk not making a profit). Too expensive and you never win any business.
But the power of your pricing is actually in the way it’s structured. The shape of the pricetag not just the number. It can really amplify your proposition or create dissonance that undermines what you say. Consider the following:
– You sell a fixed price project with an end deliverable. Do you charge a fixed project fee or are you billing a day rate? In which case you’re selling your time, not a deliverable.
– You sell an advertising package that promises leads from a combination of media. Do you charge them for the space in each media, a fixed fee based on exposure, or for a number of leads. What are you selling – the leads or the media access?
– You tell people that your content has the same value on any channel. Do you charge them the same fee regardless of how they consume? Or is one channel cheaper than the other and therefore less valuable.
– You sell a full learning programme that includes events. Is the ticket price to attend the event included in the programme fee, or do you charge for event tickets separately?
Precisely because the shape of your pricetag has such a powerful impact, it’s not a one-dimensional decision. It’s definitely something finance and sales should both invest in, but it rarely reinforces your proposition if the price is structured based on who owns which P&L or target. Why would your customer care about that?!
The missed opportunity here is to involve marketing and use your pricing discussions to test your value proposition. To make sure you’re prepared to ‘put your money where your mouth is’ and bill for what you promise.
Before you promise it….
Jill Pringle is a brand marketing consultant and published author. She offers consulting, mentoring and training programmes that help CEOs and Marketers orchestrate a better marketing strategy.