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How thoughtful are you about your company’s pricing strategy? Let me give you an example.
We use an on-line vendor to provide extranet services for our clients. We’ve been with them for over five years. We recently discovered a better, cheaper solution. It wasn’t the cheaper that sold us. It was the ease of use for our clients.
But cheaper doesn’t hurt. And this was cheaper by a couple hundred dollars a month.
When I contacted the old vendor to cancel our service, guess what their immediate response was.
“We can match their price.”
What? So you’ve been overcharging me for years? Or you magically just had a price reduction to the very dollar amount of my new vendor and you were about to call and tell me about it?
Talk about leaving a bad taste in my mouth.
Dropping your price to keep a customer is never a good strategy. It can only make you and the client both feel taken advantage of and in the end, no one wins.
Your pricing strategy is one of the key components of your marketing message. It speaks about things far beyond your cost. It communicates value, customer attentiveness and how you view the relationship, both short and long term. It’s not something you should just stumble into. And it’s not something you should damage by mishandling a situation, like our old vendor did.
There’s an interesting couple articles over at Marketing Tips from the Trenches about how to think through a pricing strategy and how to test it. Worth a read.
