Are you underselling yourself?

The fine art of getting the price right

price is right

You’re looking for a new digital camera. You’ve checked out the models, the features, the resolution. And you’ve settled on a great bargain. You can’t believe your luck: a 5-megapixel camera for just £100! It used to be £200, so you’re getting a 50% discount. The nearest comparable camera is £225, so you’re on to a good thing. You’re happy, right? Not for long. You read online that a new model is just about to be released – and that’s why this model’s being sold off at £100. Now how do you feel? Remember, it’s still the same camera you set your heart on. And it’s still £100. What’s more, the new model is £250, which is way beyond your budget. So it’s a great deal, and it’s just what you want. It’s not 7MP, like the new model, but you don’t really need that resolution. So what do you do? Spend £100 and save £150, with the niggling doubt that your camera is yesterday’s news, or fork out £250 and wonder why on earth you’ve blown the bank? (If you’re anything like me, you’ll prevaricate until the £100 offer is over – and then regret not going for it. Then you’ll buy the £250 model, and feel regret anyway. Or is that just me?)

Art or science?

Getting the price right is never easy. And there’s simple reason: there’s no right price. The price is what somebody is willing to pay, not what you’re willing to charge. And it’s about perceived value, not real value (after all, there is no real value – just the cost). Like Japanese food? You should try Masa when you’re next in New York. Just make sure you’ve got deep pockets. The least expensive glass of wine is $16. The most expensive bottle of wine is $3,200. And guess how much an Omasake dinner for two will cost? A gobsmacking $800 (no, that’s not a typo). Naturally, it’s a huge success. It’s only got 26 places – and a three-week waiting list.

Think of a number and double it

Many years ago, my aunt was contacted by a glossy magazine through a friend of a friend. Each month, the magazine featured a sumptuous interior, and needed soft furnishings to set off the luxurious properties. And that’s where my aunt came in. For she was in the soft furnishings business. Well not business, exactly. She made them for friends and relatives – cushions, throws, bedspreads, curtains. You name it, she could run it up on her trusty Singer. They asked her for a quote. She panicked, made a cup of tea, and then called up a friend who had lots of business experience. “Think of a number,” said her friend. She did, and wrote it down on a pink envelope. “Now double it.” She did. “Now add on a bit more.” “How much?” said my aunt. “As much as you like,” said her friend nonchalantly. And so, she came up with a figure. With horror, she picked up the envelope and showed the astronomical number to her friend. “That’ll do nicely,” said the friend. And it did. My aunt submitted the quote, and was immediately offered a contract for a year. 12 months later, she doubled her price. And they signed her up again. The lesson is simple. It’s not about price. It’s about value. Find out more:

Next time you’re feeling peckish in New York, why not head on down to the Time Warner Center and splash out on that $800 dinner at Masa? www.masanyc.com

Kevin Communication, Marketing.