After digging around enough, you’ll be able to generate a range of prices that your competitors fall into. Together with your financial prices, you’ll now have two reference points.

Pricing by position The last step is to and ask this question “How do we want to be perceived in our market?” In my book The Marketing Toolkit for Growing Businesses , I identify 13 possible price strategies you could choose from, but to make this easy, consider just three: ·Premium Price; most expensive 1/3rd of your market ·Middle Market Prices; middle 1/3rd ·Budget Price; least expensive 1/3rd.

Based on value factors you’ve identified and your chief competitors, which of these 3 price level best matches your product? The lesson in this exercise is that price positions your product.

The worst pricing decision you can make “Because we’re slow right now, we’ll lower our prices. Then as business rebounds, we’ll raise them.” This is a bad marketing decision because lowering your prices immediately positions your product differently to buyers. Plus very few companies make attendant cost reductions, so margins erode. And when you try to raise prices again, customers who bought at lower prices will expect to get more value factors for additional price. A better strategy is to maintain your current prices while seeking cost reductions to maintain your margins.

Another bad pricing decision “If I drop my price to $15, then will you buy?” Here, you signal to a buyer that your list prices are not final. Sensing this, buyers will negotiate harder and resulting price reductions will cut into your margins. Instead, think about coupling price discounts to buyer with equivalent reductions in your offering. For example, you could say “OK I can lower my price to $15, but I’ll have to reduce our warranty period from five years to two.”

Sure, pricing is a financial decision. But it has wide ranging impact on your positioning, your selling efforts and your product offering. Remember words of Thomas Paine “What we obtain too cheap we esteem too little; it is dearness only that gives everything its value”.

And if you want to witness marketing strategies at its finest, you must have enjoyed presentation of two dumpy apartments by Trump as each team renovated them for him -- not only free, but they found tenants for him afterwards! Or selling lemonade on New York streets for $1000 each with Trump label on glass.

In a brilliant move he also introduced his latest venture – water business -- by having teams compete to see which could sell most bottles. So let me ask you, if you walked into your neighborhood convenience store to buy a bottle of water and happened to come across one with Donald’s picture and Trump brand clearly stamped on it, would you buy it? Well, maybe, maybe not.

When The Apprentice ended its first season and all had been “fired” except Bill, was Bill “real” winner? He now has a career running one of Donald’s many business ventures. But look what Donald Trump gained… a master marketer molded in his own image, two renovated apartments fully rented, a bottled-water business that is flourishing, a book on best-seller’s list and another TV contract for a new three-months of The Apprentice.

Hey, is this marketing or is this marketing?

© Esther Smith