Pricing: think structure and transparency as well as amount

People are price conscious. But they’re not just conscious of the total amount you want them to spend with you.

Mary Schmidt, one of my favorite marketing bloggers*, wrote about a $25 magazine subscription that costs $29 (and thus was not purchased). It’s a simple concept: when you tell someone what your product costs, it should match the amount of money they have to give you.

The telecoms are, of course, the worst offenders here. There’s the $30 plan that costs $45 once all the fees and taxes are added on. There’s Comcast, who charges me a set amount for digital cable service, then adds another fee on for the digital cable box (which of course I have to have in order to use the digital cable service).

Some of these things are legitimate. I don’t get irate when I buy something for $10 and my local sales tax is added on to it; they have to collect it, and it’s different everywhere, so that’s fine. I don’t mind that there’s a shipping charge, although most online retailers do a horrible job making it clear what it’s going to be and laying out options for you to pick from. (Retailers: go buy something at Amazon, note how the shipping part of checking out works, and take notes.)

(I had a particularly frustrating experience with that one on the FTD site the other day. Delivery charges doubled for Saturday delivery. This was not obvious until I was about to click the final purchase button. The only way to compare prices that I could find was to change to Friday delivery and see what came up - and that required re-entering all my billing information. Sigh.

When you are setting pricing, put yourself in your customer’s shoes for a minute. If you are selecting different vendors and looking at price, do you want to see $20, $20, and $20 each with its own set of taxes and fees and extra charges, which you have to calculate? Or do you want to see $22, $24, and $23.50?

The whole thing stinks of trying to fool people by hiding part of the cost.

If you are in a market where this is common (like telecommunications), you should disrupt the market. Take everything that can possibly be rolled into your base price and put it there. Yes, your price will be a bit higher, but if buyers are accustomed to being bombarded with unexpected, cryptically-labeled charges, your slightly higher but crystal clear price is an advantage. Make noise about it.

Of course the total price matters, more in some markets than others. But it’s not the only part of your pricing strategy that matters. Make pricing work for you by using it to make the purchase process easier, and more people will want to make that purchase.

* Mary writes a great blog, which you should read, and incorporates Buffy references. In my book, that makes her good people!

---

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically each day to your feed reader. If you don't have a feed reader, you can always have these articles delivered to your email inbox every day. Click here to sign up.

The Opinionated Marketers | Powered by WordPress | ElegantBlue is a custom theme by Nathan Rice