3 Strategies to Profit from Lessons from an Auction
The fact that different customers will pay different prices for a product is why pricing is a robust business strategy, not a search for the “perfect price.” The strategy of pricing involves implementing strategic tactics to capture your customers’ different valuations. It’s time to determine what Early Bird, Regular, and Chef’s Table strategies you should be offering.
Strategy 1: Differential Pricing
The strategy of selling the same product at different prices to different customers.
For example, cost conscious customers that use coupons pay different prices relative to those that don’t clip and use coupons.
Strategy 2: Versioning
The strategy of selling slightly different products to different customers at different prices (often by offering good, better, best products) . For example, gas stations offer regular, plus, and premium versions of gas.
Strategy 3: Segment Based Pricing
The strategy of offering new pricing structures to attract new customers.
For example, a good friend of mine recently turned 70 and wanted to take his family (kids/grandkids) on a family celebration to the Caribbean. Responding to my inquiry on where he was going to stay, he responded without missing a beat “an all-inclusive.” At all-inclusive resorts, you pay one price that covers all meals, drinks, accommodations, and activities. Further elaborating on his decision criteria, my friend commented “Rafi, it would kill me to see those kids on the beach sipping $5 Cokes.” A sentiment that many of us can relate to.
Given my interest in pricing, I found it interesting that of all the attributes of a Caribbean resort, my friend’s search centered on what pricing strategy was being used.
|
