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Price Reframing

Disciplines > Marketing > Pricing > Price Reframing

Description | Example | Discussion | See also

Description

Frame your marketing so your price sounds reasonable, rather than taking a position of having to minimize the price to beat competitors. Ways you can do this include:

• Emphasize the benefits, the things they will get from using your product. If your product offer them more benefits, then you are effectively making each benefit cheaper. You may even be able to  calculate the 'cost per use' of the product.
• Introduce the idea of 'cost of ownership', whereby factors such as the costs of maintenance (including service intervals, service costs, spare parts costs and the inconvenience of down-time) are included. The lifetime and even disposal costs may also be important here. Show that your cost of ownership is lower than that of your competitors.
• Offer payment terms, whereby they only have to pay a limited amount each month. This can make something that is expensive become relatively affordable.
• Change the pricing options so it is rather confusing for the customer and they do not really know how much they are paying for what. Only do this if you can guide the customer with your expertise to the 'best setup for them'.

Example

A car sales person emphasizes benefits including safety and longer times between services. Selling a new car, they also point out that the warranty means there are no maintenance costs for three years.

A potato chip company brings out a 'low fat' line. They charge slightly more for this as their marketing now includes health claims.

A local computer shop sells systems for more than customers would pay online, but they emphasize the benefits of setting up the systems and providing easy local support.

Discussion

If you sell on price, or even let customers default to a simple price model, then you will find yourself in a price war with competitors where your margins will get squeezed and you may even become unprofitable. It is hence important that customers think more about what they are getting than the price they are paying. And when then do think of price, they need to think they are getting good value for their money.

Remember that benefits are not features. It is benefits that customers value, not features. Benefits are what you customers truly gain from using your product or service. Features may lead to benefits, but not necessarily so. It is important to understand this equation through your customers' eyes. Some features, even small ones, may give huge benefits that are greatly valued, while other features, even major ones, may offer little or no benefits.

See also

Benefit Pricing, Lifetime Pricing