The Four Ps and the Importance of Pricing
And if there's one thing that I want you guys and everyone else out in the world to, uh walk away with in regards to pricing it's that pricing is marketing if you were to take like, a marketing wanna one class um they like to tell you about the four piece of marketing you've got product, which is not only the physical products you sell but is your brand so you as a person, you're customer service, you're visual branding like your logo and your packaging that's all part of your product, your product as a business as a company, then you got price price is one of the parts of marketing and I'll show you why in a minute you've got place sometimes also people instead of place. This is your market. These are the people that you are trying to reach, and the places where those people are so is your market high end galleries is your market toy stores? Um is your market wedding consultants? And then we have promotion and that's what people typically think of as marketing but it's really just one...
of four parts you got the promotion, which is the advertising it's, the social media it's the coupons and discounts it's the freebies um it's how people know you exist it's just informing people of who you are then you want to make sure that you're informing the right people in the right places of who you are charging them the price that's in line with that market right and delivering them the product and the experience that is also in line with that market so let's go back for a minute since we're talking about weddings um I wanted to bring up a story that uh meg matteo alaska told me many years ago at a design sponge biz ladies meet up they to have these years and years ago uh she used to design custom wedding invitations and if you're not familiar with meg matteo alaska she's the author of all of those um chronicle books creative ink so there's like kraft ink mom inc um a bunch of other small business books for creative types um a very nice lady and um she was starting to make some of her own product she was starting to write these books and she decided I don't really want to be in the invitation wedding design business anymore um but as I ramp down, I don't want to lose a lot of income, so I'm going to start pricing my designs higher and higher and higher so that I'll still make about the same money even with fewer clients it's a pretty good idea is a pretty good plan she was actually looking at her numbers figuring out well, what do I need to charge? You know something like if I only want half of many clients and I double my prices, that should work out. You know, only half of many people will be able to afford me. Anyway, um, anybody want to guess what happened at that point? You do a lot of work with wedding people raised. Do you have a guest? I have no idea. But I will tell you, the exact opposite happened. She doubled her prices, and soon she became one of the most sought after invitation designers in the country, or at least locally in the bay area. Because, uh, everybody thought that she must be the best, right? She had these outlandish prices for doing this invitation design and sew people who were buying things for their one. And on lee, special day, that had to be perfect in every way. I looked at those, uh, prices and, of course, they were in line with the product she was delivering. She did delivered a very high quality product and customer service. Um, we're like okay, yes, great. This is clearly the best. And I want the best of the best for my special day, so she was inundated with clients who all wanted her to do this design um and I put this bottle of sun moon and stars perfume up here because at around the same time I heard a similar story that karl lagerfeld sales of this particular perfume were plummeting and so they hired a marketing consultant to tell them what should we be doing should we be you know, changing our displays and putting the perfume or prominently in the department store shouldn't be changing the packaging should have a more upscale name on the consultant came through and said no, just double the price and so they did they made it way more expensive and all of a sudden sales took off, right? I mean, all in all of the math that we've been talking about so far, that seems really incongruous. Uh, but pricing is marketing the price you put on something a signs in an arbitrary value that people looking at it will either agree with or not agree with and that has to do with the market that you're putting it in. So when we talked about the different ways to be profitable making plush as an example um, you know, one way to do that is to make very intricate, beautiful uh, soft sculpture to call it soft sculpture and not a plush toy, right? And to put it in museums and galleries um and places where it will be seen as fine art as opposed to a children's toy right? This is all part of part of perception um so so you're pricing is like I mentioned one of those parts of your marketing and as long as it's in line with the other three parts it could be really powerful um so you could do a lot with your price and you can have a lot of wiggle room with your pricing I can sell you know, a large ham for sixty dollars online or in toy stories or whatever um that I had you know, made overseas I can sell an identical looking ham that I've made myself and put it in a gallery for five times that no problem because it's matching it's still a high quality item but now I'm telling people and I'm telling the right people in the right location this is fine art this is not a children's toy it therefore costs this it was made by an artist it was not made by a factory overseas it was made by hand by an artist in an art gallery. This is part of an exhibition here is what it costs um and I may be appealing to the same customer who would buy a sixty dollar one as a plush toy but because they're in the right place and in the right mindset um even though they have a similar aesthetic sensibility to the person who's buying it online as a toy they're perfectly willing and able because they're going to the galleries in the museums in the first place to afford the three hundred dollars version. And then when they take it home, they're probably not going to let their dog play with it. And, like, two, it drag it around the house, right? They're probably gonna put it somewhere. Um, you know, on display and use it as art, because that's, what I've now transformed this into.