After reading a few articles on Pricing from about.com (Super Charge your business with profit pricing strategy, How to set and get the right prices) I began to think about my own pricing strategy. Is it true that customers may buy a product at a higher cost because it has a higher perceived value? Can this be true in these times? The dollar is king …. or is it?

Enter life lesson number 1

When traveling I usually stay at a moderately priced nice hotel that has fair accommodations and good service. Over the recent 4th of July Holiday I stayed at a 4-star hotel which by an awesome turn of luck upgraded my room to their deluxe courier service level (some overbooking error or something … sweet). Now I must admit staying at such a plush establishment was not my idea and I had a cloud of “what’s the big deal” about me upon entering the hotel. However you notice instantly that the level of customer service is something that you do not see at moderately priced establishments. You are greeted upon arrival, your bags are carried for you if necessary, and your car is valeted if you choose. Once we got to the courier level we were briefed as to the various offerings of the hotel. We were offered complementary meals at 4 different times of the day and the courier station was at our beckon call to fill whatever needs we had at the time. This is certainly something that you do not see in your average hotel. Our rooms were also outstanding. Although at first glance things were not much different than the moderately priced hotels but upon further inspection you could tell that a great deal of care was taken as to the placement and upkeep of every detail of the room. After my shower I stepped out and thought “This hotel truly is very nice”. You not only pay for an upgrade in accommodations but your entire experience is upgraded.

Enter life lesson number 2

I hate to admit but every once in awhile I frequent the local fast food restaurant when I don’t have my lunch with me. Usually I can expect descent food descent service and hopefully my entire order will be correct. I admit depending on the local you get different flavors at this establishment some are great and the food is always fresh some leave you asking why did I bother. Unfortunately this story is of the second variety. After ordering my food via the drive thru I returned to work to see my food was missing incorrect and just sloppy overall. I’m the type that can usually handle a mistake or two but this type of total disregard for customer satisfaction left me appalled. I promptly returned my food and asked for a refund. I then proceeded to the local cafe shop which I knew would be slightly more expensive. I go to the counter to order and I am greeted by a friendly cashier with a smile, rather than the unorderly person that greeted me at the prior establishment. I order and sit at the counter to wait for my food. The cook who is making my food then makes small talk with me while asking if I want anything else or special on my sandwich. The overall atmosphere is just … better. I get my food back to my desk and it is all correct, neatly prepared, and very delicious. The increase in experience and the few extra dollars seemed to go hand in hand.

The moral of these stories is many small and medium sized business try to compete on the basis that if they charge the lowest price they will receive the most customers. This maybe true for the short run but big name companies will always win that battle over the long term and eat away at your potential profits. The advantage that small business has over big business is the value of what they offer. Small businesses can pay more attention to detail and provide a level of customer service that is missing in many of the big name companies. When creating a pricing strategy make sure that you do not under price your product or service. By pricing low you may be relaying the message that your product/service is cheap. Make sure that customers understand that what you offer is top quality and you will get top dollar. I hope this helps a few of you. Let me know if you have any topics that you would like to be discussed and we will handle them for you.

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