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Top 20 Marketing Mistakes: Number Three-Wrong Pricing Model

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Photo Credit:  ActionCOACH

Discounting is a mistake. Period.

The Wrong Pricing Model comes in third in our Top 20 Marketing Mistakes series. We previously discussed the top two blunders: having no marketing team and using we vs. you verbiage in marketing materials. But pricing actually IS marketing.

Think about it. Stores often categorize items by high, middle, and low-price cost.  And the human assumption, without fail, is always that the cheapest item probably has the lowest quality. When you buy a higher priced item, whether the quality is superior remains to be seen. What can be quantified, however, is that the marketing strategy behind the higher end ticket was superior.

There’s a difference between discounting and creating value. Discounting is the worst mistake that you can make in business.  Price-focused shoppers who aren’t loyal will only stay around when you offer more discounts, in which case, you’ve lost the customer and profit.

Adding value is giving something away that adds value to the overall sale but doesn’t cost you much. For example, if you pay $1,000 for a jacket and it’s discounted at 10 percent, you’ve saved $100. But if the seller instead includes a shirt worth a retail value of$140 (an item the seller paid $30 for) in the sale as an added value, the overall worth of the interaction is increased as well as the perception of the brand.

Remember, if you are cheaper than your competitor you are telling the market that you are not as good as your competitor. Price according to the market, not cost, or discounted competitor pricing. 

 

About

I am a certified Business Coach with ActionCOACH, the World’s #1 Business Coaching Franchise (Entrepreneur Magazine, Jan. 2004 & 2005). I have directed customer service, project management, marketing, sales training and business strategy development functions throughout my career. My business accomplishments include award winning business strategies and business transforming process improvement initiatives. This broad based business development expertise combined with ActionCOACH time proven methods gives me the wherewithal to help clients to significantly strengthen and aggressively grow their businesses. As your coach, I will be working with you in six key areas. The emphasis on each area depends on your needs, the type of business you have, and your goals. The key areas are: 1) Strategy, Planning & Goal Setting 2) Marketing & Business Development 3) Sales & Customer Service 4) Operational Efficiency & Productivity 5) Leadership & Team Building 6) Profitability & Cash Flow My goal is to help small business owners, such as yourself, spend less time working in your business and more time working on your business. In the end, you’ll be spending less total time working and will be making more money. I’d also like to help you put the FUN back in your business and your life.