34 Lunch: When customers think you charge too much, and you don’t think you charge enough
Written by Julia Bickerstaff // May 24, 2012 // Daily Juice // No comments
Today’s story is inspired by this blog post from PetaPixel.
The story goes like this. A bride was looking for a wedding photographer on Craigslist and was infuriated that they all seemed to charge $3000 to do the photos. So she posted a note on the website which said ‘the prices are WACK….because all [a photographer does] is hang out at weddings and take tons of photos’.
A photographer (PetaPixel) read the post and was, in turn, irate at the bride for insinuating that her brethren make pots of money out of weddings. She also posted a response on Craigslist detailing all the costs that go into her wedding photography and ‘proving’ that she actually makes no money.
It’s a lovely insight into a common problem: your customers think you are expensive while you think you are too cheap.
What it is
A way to help customers understand they are not being, um, ripped off.
Why it works
Most of us have no idea how much effort goes into the making of a product/ service. So it’s understandable that we balk sometimes at prices.
But if we do get an insight into the ‘making’ process we either:
- happily accept the price. it now feels so worth it, or;
- decide not to buy because, as it turns out, we didn’t want something ‘that good’ in the first place.
Either way the seller and the customer are happy: the person who wants the product buys it and the person who doesn’t, doesn’t.
So, provided you do it in an elegant way, explaining how you reach your price can be helpful to both the customer and you.
How you do it
Well first of all I don’t suggest you do it in the PetaPixel itemised cost way! I think if you justify your price in terms of actual costs it makes you look desperate. Harsh but true.
What does work well though, is to put something together which explains the process you go through, the quality of the equipment you use and anything else which helps the customer build up a picture herself of the effort (and cost) that goes into making the product/service.
Along these lines, Chanel have a video which shows how a (very pricey) Chanel jacket is put together. I wrote a blog about this a few months ago. The video obviously doesn’t detail costs but it elegantly justifies the price because you simply wouldn’t expect that level of handsewn care for anything other than an extortionate price tag.
If you are looking for a subtle way to explain your prices, you could put together a video, like Chanel, about the creation of your product, or a fun ‘behind the scenes’ photo montage. Or you could just tell your story.
Years ago my parents were thinking about having a staircase built by their neighbour, a carpenter. I remember the neighbour telling my Dad about how he would go about it if he got the work. There he was, this passionate man standing in our kitchen telling my Dad a story about choosing timber, routing wood, polishing and finishing. My Dad was mesmerised and of course gave him the work. It wasn’t a cheap job but to this day my Dad thinks he got a bargain. “You should have seen the work that went into this’ he likes to say, patting the bannister.
And that’s the essence of good pricing: when a customer feels they got slightly more than they paid for, which was at a price that still made you a profit.
Final thought
Agh, I can’t not say this. I looked at the PetaPixel numbers and came to thinking that the bride had a point. Ms Pixel only works for four months of a year but has use of her car, studio, health insurance, high speed internet etc for a whole year….. If MsPixel were to find a full 12 months of work her expenses compared to her income would be two thirds less and she’d make a nice profit! Eight months a year off, anyone?
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