You’ve done all that you can do to get your start-up started. You’ve done more than you’re due diligence by meticulously researching your closest competitors and potential customers, how they differ and how you’re product or service is superior. You’ve set yourself above all potential competitors by positioning yourself and becoming an expert on your service (or product) yet the competition keeps coming up and nipping at your heels. Just keeping your start-up afloat requires you to dip into your savings or scrounge up your saved pocket change to take to a Coinstar machine and you’re wondering if you and your partners will ever realize a profit, maybe the principle problem is your pricing.
Even Disneyland has a problem of getting pricing right, believe it or not. This simple and all too common corporate conundrum is one of the first principles taught in Economics, it is the magic formula between supply and demand. Finding that fulcrum isn’t easy. Just today Disneyland Parks announced a new pricing system for annual passes which will deal with their problem of over-crowding on high attendance days. Just like the airlines, hotels and with Uber, money talks.
As adeptly noted by Peep Laja in an article for ConversionXL, “People are weird and irrational and there’s much we (still) don’t understand. Like why do shoppers moving in a counterclockwise direction spend on average $2.00 more at the supermarket?”
Laja also has cited a study from Cornell back in 2009 which observed that the simple act of omitting the dollar sign increases sales. Should you have also studied some psychology in the R & D process perhaps?
There are plenty of tasteless tactics in pricing strategies (the magic power of “9”, the “decoy” decision option, etc.) as well as wealth of interesting value quirks we have that are really nuggets of priceless knowledge when it comes to pricing your own product (or service) and understanding your customers and maybe just being able to predict their behavior a little better.
Your business may not be of Disneyland size and capacity just yet, but perhaps your own pricing strategy could use some old fashioned supply and demand revision too? Learning business strategies from corporate power houses (like Disney and Apple) is like having the cliff notes to capitalism in your pocket. Instead of making mistakes yourself with your start-up, learn from others (it’s more cost effective) and dare to steal their strategies (if they work)-why not? Additionally, here’s a great (“25 Unconventional”) book list for some further research in your (not) free time. No matter what the price is, you cannot afford to give up on your dream (your start-up) and you’re initial (and ongoing) investment(s)-keep the change!
Photo credit: By NBC Television (eBay item photo front photo back)”The Price is Right” c. 1963 [Public domain], via Wikimedia Commons.