Bernadette Jiwa, the marketing strategist and author from Dublin but now living in Melbourne, recently blogged her coffee story.
“When my family and I were in Venice recently we decided to take a seat in a tiny Cafe in St Marks Square and ordered four hot drinks (anyone who has holidayed in Italy knows what’s coming next!). There was nothing remarkable about the coffee but we walked out half an hour later having paid €37 for 4 drinks.… the most expensive cup of coffee I have ever had.… my husband kept the receipt! The lesson.
If you want to sit, not stand to have coffee in Italy you will pay a premium. The way a service is designed and delivered can alter its value. The price of a commodity has little to do with what it costs to produce and everything to do with customer perception and available alternatives. Many of my clients struggle with pricing their products and services. Here are 10 questions to ask and answer to help you with your pricing strategy
- Have you covered your production and service delivery costs?
- What’s your customer’s perception of the value you deliver?
- What other choices do they have?
- What do you want to communicate with your pricing strategy?
- Are you telling a story about luxury, affordability or something else?
- Have you taken the availability of alternatives into account with your pricing?
- Have you done enough to convince your audience that there are no better substitutes to what you offer?
- Can your mode of service delivery, specifications or design add value?
- Is your pricing strategy in line with your longer term business goals?
- What type of clients are you trying to attract and how can you use price to send a signal to the right people?”
So the next time you are having a coffee give some thought to what you can learn from the experience. I am sure that someone will generate insights that will more than pay for all their future coffees!