Using Your Price as a Marketing Tool

October 10, 2011

When we think of marketing based on pricing, we usually think of advertisements for sales prices or special limited time discounts. But you can be using your price point as one of your most effective marketing tools. The best part is you don’t necessarily have to be the cheapest in town to use price to lure in customers.

Know the Competition

First, you’re going to have to know what the competition is charging for the same product or service. You need to find out where the price you charge lands in relationship to theirs. Now keep in mind it doesn’t mind where your price falls along the spectrum. The important thing is you know.

Know Your Market

Second, you’ve got to understand something about your current customers. What motivates them to purchase a product? Why did they choose your company over the competition? This type of information will help you figure out how others perceive your business. You also need to know whether affordability is more important than quality when making a decision or whether your customers pay a premium for your service. You can use information about your current customers to make assumptions about your potential customers.

Make Your Pitch

The marketing approach you take here depends on where your price falls in relation to the competition. For example, if you are one of the most affordable companies then you might create a tagline like “Where affordable prices meet quality service.” You can use that in all of your ads, on your business cards and letter head, etc. The idea is you are promoting that low price as one of the main selling points of your business.

But what if you are one of the most expensive? Well, you can’t pretend to be cheap when you’re not. Instead your marketing approach brags about being expensive but being worth it. For example, you might create an advertisement as part of your marketing. The ad could show a junky car next to a brand new one. Under the pictures, have the prices of the two vehicles. Add a line such as “Cheaper isn’t always better. Get what you pay for with Company X.” Now you’ve just given customers a reason not to automatically choose the lower priced competitors.

Of course, you might fall in the middle of the spectrum with your price being about average in your area. You obviously don’t want to market your company based on the benefits of either pricing extreme or else you’ll drive customers to your competition. Instead, you can actively market against both extremes. Here are two examples:

  1. Send out a flier or postcard including the cheapest price among your competitors. You don’t have to include the competitor’s name. Add a version of the following message: “We may not be as dirt cheap as Company Y but that’s because we never cut corners when it comes to quality. We know you want a product that is worth what you pay for it.”
  2.  Send out the same kind of flier, postcard, or brochure. This time target one of your most expensive competitors. List what you get with their service then list all of those same things as what you offer (if the lists aren’t exactly the same then don’t add any to their list that you don’t offer). Show the price they charge for the service. Then add: “Why pay $500 with Company X? You can get the same service for less with Company Z.”

As you can see there are a number of ways to use your pricing in your marketing efforts. You just need to think about where you fit in and what your potential customers are most likely to respond to.

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