Reilly Newman | Most view the pricing of their product or service as a simple, straight-forward step in the process of setting up their business. A calculation involving expenses and market demand where you hope to come out with some profit… right? Wrong.
Sure, your pricing definitely needs to take into account your expenses for your business to survive. But more importantly, your pricing needs to take into account your brand for your business to thrive.
By aligning your pricing with the desired perceived value of your brand, your business will be able to charge what it should while increasing the value of those dollars spent.
On a very basic level, there are two fundamental levels to this.
A brand can be perceived as economical or luxury. Dollar Tree or Restoration Hardware. Toyota or Land Rover. Samsung or Apple.
(Even based on these two attributes, you can see how it is a massive sliding scale depending on the market category, brand positioning, type of service/product, etc. But let’s keep things simple for the sake of conversation.)
Just as it wouldn’t make sense for Toyota to sell a $200,000 vehicle and Land Rover to sell a $20,000 vehicle, you can see how the brands align with the precedence they set with the pricing they demand.
Far beyond additional bells and whistles one can expect with a higher-priced purchase, these products will typically have the same functional benefit. Whether a $1,000 iPhone or a $200 Galaxy, you can call, text, and browse all the same. Whether Land Rover or Toyota, those four wheels will get you to your destination just fine.
So what justifies a higher or lower price simply based on the brand? The pricing – which to a basic extent is dictated by cost of materials, craftsmanship, etc. – is more importantly an extension of the shared mindset and belief found between the brand and the audience.
This may sound odd simply because – on average – we are sold based on paying more for “better” or more features. But people pay more for purchases based on belief everyday, from free-range chicken eggs to cost-saving outlets and genuine leather to wholesale.
The mindset shared by the brand and the desired audience is a shared belief, whether that mindset is “Quality matters”, “Coupons save big”, “The customer is always right”, “Ingredients matter”, “Saving time is more important than money”, or “Shop and support local”. As you can see, most of these terms are projected through the brand and its marketing. These are brand beacons flashing to grab attention and draw near those who not only agree with the signal, but say “hey that looks like something I’d enjoy”. Once this happens, the responding consumer sees more value in the engagement with the brand.
Notice we say that there is an increased value in the engagement not just the transaction or product/service. This creates longterm, perceived value that is embedded into the brand from the audience’s perspective. This is why Grocery Outlet is valued by some and Whole Foods by others. The value isn’t found in the actual dollar amount, but in the aligned relationship that fuels the overall experience. The pricing is another signaling beacon that says “hey we are the right brand for you.”
Pricing isn’t about the amount of dollars spent or saved. It’s about connecting deeper with your audience. This allows your business to thrive, rather than just survive.
