When working on your marketing and copywriting strategy, one of the main factors is the price of your product, and how that price is perceived by your customers.
There is a lot more that goes into pricing than you might think. Your price strategy will largely be based on how consumers perceive your product or service. Why do you think people (including you) are willing to pay more for a brand name product just so you can have a popular logo on it? Your copy needs to stress the advantages of your price strategy and stay away from it’s weaknesses.
There are basically three strategies to pricing:
1. Price Skimming
Price Skimming, is defined by pricing your product on the high end. This strategy may be an option due to quality of the product or service, uniqueness or even just brand perception. Apple computer does this by producing great products that they price higher then competitors products and rarely sell at a discount, their innovation, quality and reputation allow them to do this. (Remember though, no matter how unique your product is, you still have competition from the other things that a person can spend that money on).
Sometimes your level of service can justify a higher price, if you guarantee your product for 5 years, people will be willing to pay more than a product only guaranteed for 90 days! Some people do want peace of mind and that can be a powerful persuader depending on the audience you are targeting.
The caution here is not pricing yourself out of the market. In our recent economic downturn even Saks Fifth Avenue was reducing prices for a time to be able to be competitive (but note that they did not do it for long).
2. Price Penetration
Walmart is the example of Price Penetration, they go for the low price and best market penetration. Generally the price penetration strategy will be marked by lower levels of service, less frills and often lower quality.
There is danger in this model if you don’t have a well run organization. This strategy is associated with margins that are low and the need to sell on volume to make a profit, mistakes in this strategy can cripple or destroy a business. Many companies in financial trouble make the mistake of lowering the price below their competitors to try to capture market share and stay in business. They then put themselves in a position where it is impossible to stay in business, much less be profitable.
It may make sense to adopt this strategy with an “Introductory Offer” to get people to try your product for a time before your regular pricing kicks in. Many companies plan to lose money when introducing a new product or entering a new market so that they can build awareness and market share.
3. Balance of the Two Strategies
Most companies adopt a balance of the two strategies. They will examine the strengths and weaknesses of their product and try to price appropriately. Part of that is not just examining your own product but your competitors offerings. Do you have a higher level of service that justifies a higher price, or do you have lower overhead because of fewer service offerings that would allow you to price to the person that just wants “the basics”. Before you can start marketing your business it is important that you know your costs and understand where your pricing hits in your local spectrum. (On a side note, my degree is in accounting, and it drives me nuts how many businesses are making decisions without financials or break-even analysis)
Remember that your goal is to make money, not just sell stuff! There is a reason that half of new small businesses fail in the first two years, they don’t analyze and plan before they start selling. Copy-writing is the art of taking these considerations into account and creating a compelling offer that increases the value and perception of your product in the eyes of the consumer. So when creating your copy ask yourself, what does the consumer need to understand to justify my price?