Pricing Fuck Ups. Ep17. Don’t Show Your Price. Hard earned lessons for freelancers from the wrong side of pricing.
Travel startup in early days.
Competing directly with 3 more brands in a very niche market. The way to go? Whatever price shows up first, the other one undercuts the price.
A race to zero to be won.
Keep your cards (and prices) close to the chest, till the very last.
Approach
A reactive position built from fear. “If I’m the first one, I’ll be undercut and lose.” [You’re already losing with pricing so low, btw.]
Its formula:
- Wait for your competition to put a price.
- Undercut them on price.
- Pray they don’t go lower than you. [aka price war].
- Squeeze any profit — if you can.
- Find ways to keep lowering your costs.
- Make things cheaper.
- Win the race to zero.
“Win”. Rinse. Repeat.
What did happen
Working on “doing it cheaper” drove the decisions and quality to be lower every. single. time.
It killed profitability: burnt out the team and risked the customer’s satisfaction.
Reality
Odds are most firms without deep pockets will go out of business.
Spoils your customers to be driven by price. THE lowest price.
What didn’t happen
A profitable business to keep or thrive. The struggle to keep things afloat was too much.
It’s a vicious loop, spiraling down to zero.
Would have done differently
Show the price first to anchor high. You set the first expectation, keep the promise and deliver it.
Offer tiers and options:
Tiers
- Early bird
- Regular
- On site/At the door
- Sold out
Access
- Regular
- Full access
- Behind the scenes
Be the least risky choice.
Anchor high: the most expensive. → Why is it more expensive than the rest? Why are the other ones cheaper? Are the cheaper options too good to be true?
Options: which one should I go with? Instead of which one of the competitors to choose. → This seems like it fits me. I can choose what’s best for me.
Lesson
Show your price.
Figure out what’s important for your buyer. If it’s the lowest price, move on, because it’s a race to zero that you’ll win. That, I can guarantee.
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