Pricing Strategies – Part 3
In part 3 of our series on pricing strategies, we discuss Framing and how you might use it to your advantage.
Framing is about what your customer is likely to compare your product or service to when they are deciding what is an acceptable price to pay. People like to compare or measure new things against similar existing things that they already understand.
For example, if Joe contacts you about a new book he is marketing, you might think about the last time you shopped in a bookstore or on Amazon and use that as your guide to what you think this book should be worth, let’s say $25. If Joe then says the new book is priced at $100 you will immediately think it’s overpriced and you now become a difficult prospect for him to convert. That’s because you, as the potential customer have framed his product against existing knowledge.
Framing isn’t always a negative thing. If you are happy to compete head to head with your direct competitors, then framing means your customer already knows what to expect, so you don’t have to spend time positioning your product or service. But if you are looking for a higher profit margin, greater sales volume, or lower marketing costs then framing will work against you.
So how can you deal with framing with your own customers?
Solution 1: Re-frame your product or service
Red Bull is a fantastic example of re-framing a product. Red Bull is packaged in slim cans so that customers don’t compare the product directly with Coke or Pepsi. As a result, the product has successfully achieved a much higher price point than its potential competitors. How can you differentiate what you sell to avoid being framed against your direct competitors?
Solution 2: Re-frame the market
This means you might benefit from re-defining the market you are trying to sell to. A great example is selling to a niche. The narrower the niche, the easier and more cost-effective your marketing becomes and the higher price you can charge. For example, let’s say you are selling a service helping Real Estate Agents perform better. This would be marketed to every real estate agent in the country and subsequently framed against every other product sold to this market. Perhaps you could re-frame into a niche where you help Real Estate Agents who specialize in selling only commercial real estate only to overseas buyers. This much narrower niche would be willing to pay more for a product or service that is tailored to their own specific needs.
Solution 3: Re-frame yourself
Would it help your business if you were personally seen as the go-to expert in your field? Become visible to your customers and position yourself as the person who has the solutions to their problems. Any services or products you are offering are then re-framed, because you are known to the customer and have set yourself apart from your competition.
Now it’s time for you to brainstorm. Come up with as many ideas about re-framing as you can that might be valid for your business. Think about how you can implement those ideas and don’t forget to create a way to measure the results so you can choose your path with greater certainty.