Thanks to Leslie Burns for highlighting an article in the MIT Sloan Management Review about pricing.
All of the issues it raises about pricing strategies and pricing mistakes are relevant to the creative industries, whether you are selling products or services, even though the examples are from big manufacturing firms.
The article underlines and expands on various advice published in the book ‘T-Shirts and Suits: A Guide to the Business of Creativity’, connects with some posts on this blog, and links in with discussions on the T-Shirts and Suits Creative Enterprise Network.
I think some of the most important points are:
- Look at your offerings from the customers’ point of view and understand how they see value in your products and services. This new perspective may allow you to increase prices.
(See also: ‘What are you selling, really?’)
- Set prices according to what the customer gets out of it, not what you put into it.
(See also: ‘Art is not what you see…’)
- Instead of competing on price with lots of competitors who do much the same as you, focus on what you can do that they can’t. In other words, focus on the areas of the marketplace where you have a competitive advantage. This will lead you to particular types of customers who need and value the things that you excel at in relation to competitors. These customers are more likely to pay higher prices because they recognise you are the best in your field.
In conclusion, you can raise your prices to increase profits by targeting the right customers if this is done as part of a smart marketing strategy based on your competitive advantage and a winning business formula.
For more information, ideas, tips and examples about profitable pricing, read David’s marketing book: ‘Chase One Rabbit: Strategic Marketing for Business Success. 63 Tips, Techniques and Tales for Creative Entrepreneurs’.
Discuss this with creative entrepreneurs world-wide on the Creative Enterprise Network.