Do You Have an Issue In Pricing Your Product or Service?

A product has no actual value until you put a price to it. And when you have put a price to a product, it actually means two things to the potential customer. They are known as “interested” and “affordability“. When you have a product which interests a potential customer, it doesn’t mean that he will buy it. People really wanted to buy it only when they can afford to pay for the price that you have tagged for it. And the meaning of affordability has to do with the maximum amount of money he has in his savings, and the kind of value he thinks your product is over-priced or under-priced.

Definitely if you have under-priced a product, it could mean two things. Firstly, people might be interested to buy it since it is so much cheaper than other competitors and hence you have a business to do right now. Secondly, because you have under-priced your product, it could mean little or no profit on your side to carry on doing business to service the customers. And hence, the customers are actually doing a disservice to themselves if they are buying a product which is under-priced, especially when they need some after-sales warranty of the product. Cheap products seldom come with warranty since they can’t afford to bear any additional cost to do one-on-one exchange to keep the customer happy. But, they could do a charge for every any recurring customer to make back their cost.

For example, I bought a Dell laptop myself which I found it quite cheap with the specifications that I bought at that time in 2003. (Yes, it’s still working fine.) At that time, I have been wondering if I need a bluetooth module for my laptop. It’s only 1 day after my laptop has been delivered to me that I called Dell for assistance to buy the bluetooth module. They charged me at a price of about SGD$100 for it which is way too expensive to buy one. Of course, I believe they charged me at this price because they wouldn’t want to do this business since it’s just a very cheap little device that they can’t make much profit to provide me with the product. If only I bought it together with my laptop, it will cost less than $50… (I forgot the actual amount since it was an issue in 2003.)

Dell has been well-known for their low pricing of computers. But I heard that their after-sale service is the one that kills. They don’t have the full 3 years warranty unless you purchased an additional insurance for it. For many consumers out there, they might want to cut the price by not taking up the warranty. But it’s actually after 2 to 3 years that the computers start to fail. Hence, you can see that cheap things don’t come merciful after all.

Welcome to the world of paying more for better service and being more merciful. If you would want to price your product at a higher price, you better start to give more values which worth at least 100 times better than the high price that you have tagged. People always want to get better services. But after they have satisfied their wishes, it voices down to the maximum amount of money they have saved… If one potential customer’s bank account has only $500, and you are trying to convince him to pay $1000, you are actually putting him on a spot of lending money or to pay by installments. But of course, they wouldn’t mind to exceed their limit if your values have overwhelmed the price that you have tagged. Let’s just imagine selling a BMW 5 Series to him for only $1000… In his mind, he will be all confused and may do any ridiculous things just to get your product. (This example is just an extreme case to understand what I am trying to relate.)

In the world of online sales where you don’t get a chance to explain your product’s value to the customer verbally, people would usually add values to the product by providing additional products and/or services as bonuses to allow the customers to compare the value and to pay for the price. The only chance you can explain your product’s value is your sales copy on the website. This is so important because it is the way to do duplication of sales in a more efficient way. Just imagine the old conventional way of doing quotations for every single request from potential customers… And in the end, only 20% or less of the quotations get to close while you have spent too much time working on all of them…

Being consistent in learning about writing sales copy is a very important step to every internet marketer. Just like a direct sales personnel… We all have to consistently learn how to do online sales because today’s sales skill doesn’t really apply to tomorrow’s market… Hence, a pricing strategy is very important over here. It really depends on selling low-priced items or high-priced items, to determine which strategy to adopt…