Marketing Mix: New Thoughts on Pricing

December 14, 2009 | Tagged marketing mix | Leave a Comment

Whether you have a product or a service, there is a natural constraint for your offering. Your capital. You may measure the capital in cash on hand or you may measure it in time, but either way, if you are a small to mid-sized enterprise, you have some (perceived) limits.

Digital delivery changes that.

But, you’re selling accounting services not ebooks so . . .

What if you could act more like a digital provider and less like a pre-digital business? What would that take?

The benefit of being a digital business is dynamic pricing. But it is sorely under utilized. Ebook sales pages claim that you’re getting thousands of dollars worth of valuable content for $27 . . . but that that price will go up to $97 at midnight, so buy now! But you know that you can come back to the sales page tomorrow and the price will still be $27. Indeed, you can come back a year later and the price will be $27.

But what if it wasn’t still $27?

What if when you came back the next day (when you actually had a chance to read the sales page all the way through) you found that the price HAD INCREASED to $97 just like they said it would?

And now, they say that the price will change again at midnight. If I had any interest in that ebook, you now have my full attention, right now. I’d even admit that if I had interest in the ebook, but not enough time to process the sales letter, as long as you offer a money back guarantee, you have my credit card flying out of my wallet, because I don’t want to miss the opportunity and I feel safe knowing I can get my money back.

Okay, that’s fine for digital products where it takes essentially zero $ to reproduce the item, but what about accounting services? Your time is worth substantially more than $0. You have mouths to feed.

Could you offer dynamic pricing based on how full your practice is?

Okay, okay, I know that many services providers “do offer” dynamic pricing, but changing your top hourly rate from $250 – $325/hour based on how full your practice is, is not exactly what I have in mind. Or using the higher rate for initial meetings with the standard rate for long term clients . . . But your pricing is standard; it isn’t bringing clients to you. It’s what everyone else is already doing.

How about starting at something that would stimulate demand?

If your normal rate is $250/hr, what would happen if you offered a one day promotion for long term contracts based on $60/hr? That might actually stimulate publicity for you if you share it widely. It could even be considered newsworthy for the local news. In one week you could go from under-full to overflowing.

I’ve had this conversation with clients before….

The pushback is, “But then I’ll have these lower tier clients in my practice.” Maybe. Maybe not.

Part of this is a publicity stunt – you garner attention specifically because you are doing something outrageous . . . and let’s face it, this is a stunt we expect of mattress sales people, not accountants. The other part is actually filling your practice. Not everyone will hear about your stunt on the first day. You may sign a few at the bottom end, but the bulk of those who sign up are likely to be somewhere in the middle and don’t forget the top end can be well above your normal hourly rate. Either way, your overhead per client just went down.

My actual (recent) experience with this: 1 service provider – pulled the campaign at the last minute, panicked, 1 product manufacturer – was able to really let dynamic pricing work by adjusting based on the number of units sold. His top end price was 177% of his standard price. Home run.

Anyone can adjust pricing, but this isn’t something to do casually. If you are going to give it a go, please have a marketing person/copywriter review your sales message so your product/service can sell itself – you don’t need your staff to be answering pre-sales calls – they should be answering pre-SOLD calls. And, do find a decent local PR person so you can drop the news in front of the right news people. If you are already well connected, you’re probably not needing to fill your practice.

Let your pricing be an active part of your marketing mix.

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