How Do I Determine the Right Price?
Testing March 19th, 2009How do we figure out the best price for our products and services? Is it based on what our competitors are charging? What we want? What are customers are willing to pay?
What about testing to find the right price? Is that sound business practice? Sleazy opportunism? Respectful and curious marketing?
And is the goal always to maximize profit? What if that’s not the goal?
Here are my current musings on the topic:
If you listen with your eyes closed you won’t be bothered by the Japanese horror-movie non-syncing of sound and lips…
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March 19th, 2009 at 4:54 pm
I’ve had this exact dilemma a couple of times. The first time was working on a t-shirt project I did a few months back, getting familiar with the internet marketing tools/world. I’m getting ready to test pricing for a bicycle company (passion project) that I recently started with some friends – I cut my teeth for 13 years in bicycle retail, and now work in a green media enterprise. We have the product ready, the site is being designed, and we’re getting ready to start testing everything via Adwords traffic. But I think it would be unfortunate not to test pricing, though there’s always the worry that a customer will feel bilked. But, sad as it might seem, they might not give your product a shot at the wrong perceived value (i.e. price). I think the bottom line is congruency, but you have to test it to find out.
Different keywords means different customers (markets), and it’ll be interesting to compare tested prices between different keywords. For instance, we might find that “simple bicycle” might have a very different perceived value than “retro bicycle” or “city bike” or “commuter bike.”
You can check it out at bowerylanebicycles.com soon…no, we didn’t test the name, but like I said, it’s a passion project based on decades of industry experience.
All that being said, the most impressive aspect of this video might be the cleanliness of Howie’s office ; )
March 20th, 2009 at 8:55 am
Howie,
What you said at about 4:40, for me, sums up price testing completely:
“Price testing is checking my perception of reality against the markets perception of reality.”
Glad I’m not the only one who mixes marketing with metaphysics :)
Cheers,
George.
March 23rd, 2009 at 11:27 am
Howie,
I never thought about split testing with the price of the product. Very interesting. Maybe the price is too high and that’s why things are stagnant, not because people don’t resonate with the product, not because the ads and keywords aren’t focused. Hmmm, I’m going to put some more thought into this. Thanks for the eye-opener!
April 17th, 2009 at 7:27 pm
I would have commented sooner but for the past few weeks, I’ve been mulling over what you said. When you said “being in right relationship” I didn’t quite know what you meant, and at the same time I knew exactly what you meant. Had the same reaction when you talked about a fair exchange of energy. Had not heard either of those terms, but hearing them made me think about what they mean and notice ways in which I wasn’t in right relationship or engaged in a fair exchange of energy. Because of that I was able to make positive changes. Thank you for making me think and pay attention.
April 17th, 2009 at 7:38 pm
Jessica, thanks for that feedback.
For me, right relationship is always so dynamic, I often find myself making mid-course corrections. With friends and family, with clients and vendors, and with myself.
I just read “The Science of Getting Rich,” a 100-year-old book by Wallace Wattles. It challenged me in some ways. I accept some of it, and reject other bits. Curious to see what other folks think of it.
April 18th, 2009 at 9:33 am
Am glad to hear that I’m not the only one who has to make “mid-course corrections” (with everyone including myself).
Find that when I’m feeling very excited about certain things, there’s an impulse to take off like a jet, and the concept of right relationship helps me slow down and notice what needs tending.
Have put the Science of Getting Rich on my reading list. Will let you know what I think of it.
May 8th, 2009 at 10:14 am
Howie, I came back to let you know that I just finished reading “The Science of Getting Rich”.
Most of it made sense to me (even if at times I felt taken aback).
It also prompted me to spend a couple of hours writing out descriptions of things that I want. Found that very helpful because in February, I decided that for the rest of my life my only real goal would be to create with my mind.
But I hadn’t read much on the subject. So I pulled from whatever I could think of, things I’d read about early Christianity, passages from certain stories, and so on. And I came up with a kind of road map.
Since then, I’ve been stumbling upon things that are helping me be a better creator, and I very much appreciate your bringing up “The Science of Getting Rich”.