Topic 4: Creating the Circumstances so Customers Volunteer to Pay Higher Prices.
Both in business to business and business to consumer settings people often choose to pay more.
Customers volunteering to pay higher prices frequent businesses taking a strategic approach to pricing. The same policy allows you to do what on first hearing seems impossible – charge more without increasing your price. This outcome is achieved when you give your customers a choice. Businesses operating in each of these industries offer a choice to spend more, a strategy with application across all industries.
Courier companies allow you to spend between $3.50 to $20 to have a parcel delivered across town. Same parcel, same town, same distance. The price is determined by your choice as to the urgency of delivery.
Car hire companies understand people will pay more for space or power, while others just want to get from A to B. So, they offer options, and the customer is left to decide. Why let the hire company fill up the tank at 3 times the price, who would pay $150 when the same amount of fuel is only $50 at the petrol station outside the airport? It is ridiculous to think anyone would do this…unless they were running late for their flight! (A word of caution here, I do not recommend profiteering and do not support this care hire practice I mention it to prove a point about decision making processes.)
Customer choices abound in hotels. Choose your room and bed size, eat in the restaurant or order room service, buy drink in the lobby bar or from the mini bar.
Chelsea is one of the most popular football clubs in the world. They play in front of sell out crowds every week of the season and demand for season tickets exceeds the capacity of the stadium. Even so each season seats are held in reserve for visitors to London, by reserving space, they can offer tourists entry to games at a premium.
Emotion drives every business to business and business to consumer purchase. In the examples just presented, search for the underlying emotion then position your offering in such a way as to generate the same feeling – a process made easier by using the worksheet you can download below.
In the next lesson you will learn how good, better, best pricing will help you increase revenue without driving away budget-conscious customers, as well as be an invaluable weapon to ensure you win price wars.