Reassuringly Expensive can be an effective pricing policy, resulting from looking at pricing and value from the customers’ point of view.
Pricing policy has both an immediate and long-term impact on a creative business and has an impact not only on the economics of the enterprise but also on the perception of its products and/or services.
Prices can be derived from costs and this is a useful services – in other words, how much should the sale of each item contribute to the overheads of the business? There is no exact way to do this but there are conventions of management accountancy which help. Whatever method you use, income from sales must be sufficient to cover both the direct and indirect costs of producing goods or services.
Distributors and retailers are part of the marketing and pricing equation, so building in an attractive profit margin can help to incentivise such partners to promote your products. Or to put it another way: if the price doesn’t produce a profit for your distributors, you won’t sell your product.
This way of calculating pricing ‘from costs upwards’ is useful for establishing a minimum price, but doesn’t in any way indicate a maximum. We need to take a look at pricing from the other end – in other words from the customers’ point of view rather than the producer’s.
The price customers are willing to pay for a service or product equates much more closely with its value to them rather than what it cost you to create and deliver it. So pricing is about the customer’s perception of value. If customers are willing to pay £40,000 for a Hastens bed, or $100m for Damien Hurst’s Diamond Skull, then that’s what it’s worth to them.
Pricing is not just about the economics of the business; it’s also intimately connected with customer perception and the enterprise’s position in the market place.
This way of thinking of value from the customers’ point ofhope, or conspicuous consumption. A Harley Davidson executive famously said (according to Tom Peters): “What we sell is the ability for a 43 year old accountant to dress in black leather, ride through small towns, and have people be afraid of him.” Because the Harley Davidson people know exactly what they are selling (or to be more precise, what customers are really buying) they can set their prices accordingly. Their motor bikes are much more expensive than Honda’s because they are selling an image, not a means of transportation. The Victoria and Albert Museum was once advertised with the slogan “An ace caff, with quite a nice museum attached”.
Once we fully understand what the customer is buying, we can set the prices accordingly.
Another aspect of pricing is the degree to which we are selling our intellectual property – or licensing it. Just as an original painting is more expensive than a limited edition print, selling the intellectual property in a painting, design or a piece of music will command a much higher price than selling a license to use or reproduce it. The seller and buyer both need to know what they are selling and buying in terms of the intellectual property associated with the sale.
Devising a pricing policy is one of the most important decisions creative entrepreneurs make about their businesses. Pricing has significant consequences not only on short term income but the long term perception of the business and the goods or services it creates.
Reassuringly expensive
There is more information about reassuringly expensive in David’s books, other publications, videos and free resources.
David Parrish inspires and empowers creative entrepreneurs world-wide as an international creative industries speaker, consultant, trainer and author.
Business Adviser – Creative and Digital Industries
Creative and digital businesses grow with the help of David’s expertise in creative entrepreneurship. He shares his expertise through his speeches, training workshops, coaching and books on business growth.
David advises businesses on strategic development, marketing, leadership and growth in his capacity as a qualified and experienced business adviser and management consultant, working world-wide.
He helps clients by drawing on his own direct experience as an entrepreneur as well as his work helping hundreds of creative, digital, cultural and arts businesses around the world. His direct experience is backed up by academic qualifications and professional accreditations in business strategy, marketing and leadership. He is a Chartered Institute of Marketing ‘Chartered Marketer’. David has an MBA (with distinction). In addition, he is a Fellow of the Institute of Leadership and Management (FInstLM). He is also honoured to be a Fellow of the Royal Society of Arts.
David is a UK expert and international creative industries speaker. He has helped hundreds of businesses in more than 50 countries to achieve greater success on their own terms. This is achieved by using smart business development techniques that fit with their creativity, ambitions and values. His creative industries consulting focuses on the needs of creative industries businesses, cultural enterprises and arts organisations.
Successful creative enterprises integrate creativity and business. David’s T-Shirts and Suits® approach helps creative people (‘T-Shirts’) use smart business thinking (‘Suits’). His entertaining and inspirational speeches illustrate ways in which businesses can use creative business models and powerful business techniques to achieve greater success. His creative industries consulting with individual businesses guides them to success by combining their creative passion, strengths and goals with a winning business strategy tailored to their own needs, values and circumstances.
Creative Business Books, eBooks and Audiobooks
David has written two books and several other publications especially for creative businesses. He brings his own experience of setting up and growing businesses in the creative and cultural industries. David is actively involved in the creative and digital industries as a company director and management consultant. He also shares the learning he has gained from working with hundreds of successful creative enterprises around the world. His books are available in paperback, eBook and Audiobook formats. They have been translated into several languages and published in various countries in several continents.
What they say about David Parrish…
Here are a few examples of what people say about David Parrish. His clients worldwide say how they have benefited from David’s creative industries keynote speeches. They also recommend his business advice, training, presentations, lectures and books:
“It was a pleasure to invite David to give the keynote speech at the Third International Creative Industries Conference in Novi Sad, Serbia. His speech about ‘Creative Business in the Digital Economy’ was enlightening. It was ideal for our audience that included startups, government officials, investors and agencies from Serbia and other countries. David’s speech was also broadcast on TV to reach an even wider audience. We were delighted with the positive impact that David made on the creative industries here in Serbia.”
Tatjana Kalezic. Creative Industries Cluster of Vojvodina KVIK.
http://www.kvik.rs
“The choice to work with David was definitely the right one. In less than two days time we had crafted a cohesive short term and long term strategy that provides for desired growth, protects our IP, enables investment, and allows us to retain creative control of our technology. David’s ability to listen to your situation, to understand it, and then determine a course of action based on your specific needs and goals is rare and a makes David a joy to work with.”
– Aric Wanveer. Zero Gravity Creations LLC, Baltimore, USA
“David Parrish was a special guest of Creative Industries Summer School held in Moscow. Creative entrepreneurs from all over Russia said that David’s presentation was very inspiring, entertaining and very useful for them. His presentation “Creativity and Business: How to Succeed as a Creative Entrepreneur” was amazing and I am sure it will help develop creative entrepreneurship in Russia. David is a very bright and powerful expert.”
– Olga Kizina. Director. Creative Industries Agency. Moscow. Russia.
“Workshop participants were very impressed and inspired by David’s speech and book because he avoided using jargon, gave clear illustrations to describe what creative business is about and explained the general principles of running a creative business. He talked about some important issues, such as intellectual property, business formulas, knowing your competitors, knowing your market, and being prepared to say No.”
– HsinYi Ku. British Council, Taiwan
“David writes about creative business better than anyone I know.”
– Wayne Morris. The Creative Edge. New Zealand.
“David Parrish is a very inspirational speaker. The way he illustrates his points is excellent. He makes you laugh and instantly you start to think about your own ideas and projects.”
– Eli Folkestadaas. British-Norwegian Chamber of Commerce. Oslo, Norway.
Read more testimonials about David’s work as an international creative industries speaker, consultant, adviser, trainer and author of two books, other publications and many articles.
David Parrish. (Photo: Cristina Poncu)
David’s Background, Experience and Expertise
Dave Parrish has been directly involved in the creative economy and cultural economy for more than 20 years, as an entrepreneur, manager, company director, management consultant, business adviser, coach, mentor, trainer, writer, and international creative industries speaker. For an insight into his personal background, business experience, values and his own perspective on creativity and business, read his story.