Captain’s log, stardate 20181021
Sent by Jonathan Stark on October 21st, 2018
Erica (my better half) is an avid knitter. And like many avid knitters, she spent the day today in Rhinebeck, NY at The New York State Sheep and Wool Festival - the cool kids just call it “Rhinebeck” for short.
Rhinebeck is the biggest event of its kind in the US, attracting more than 10,000 “fiber-arts” enthusiasts every year. It’s a really big deal for knitters. Attending is like making a pilgrimage to the holy land. It’s common for folks to spend a month and hundred of dollars to knit themselves a special “Rhinebeck sweater” just to wear to the show.
When she got home, Erica shared at least a half dozen stories I could pass along to you as pricing lessons. Anecdotes about niching down, building an audience, productizing services, monetizing expertise, creating exclusivity, branding, expertise, authenticity, and so on. But the one I want to share with you today is this:
At the show, one of Erica’s friends bought a silver knitting needle gauge ring. Erica wants one too, but silver is not her color so I went to the artist’s site to see if they had gold. Sure enough, they do sell the rings in both 14k and 18k gold.
Here’s the thing...
I don’t know squat about gold jewelry so the 14k vs 18k distinction was meaningless to me. I had no idea which was better - whatever “better” even means in this context. I suppose I could have started researching gold quality, but I didn’t need to because the artist gave me a shortcut:
The 18k gold ring was about 30% more expensive than the 14k gold version. So obviously, 18k gold is “better” than 14k gold. Sure, higher price doesn’t always equal better. The seller could be a charlatan, for example.
But when the seller is reputable and the buyer is not an expert about the thing that they are buying, a high price a darn good sign that the thing is high value.
Rightly or wrongly, the prices you set for your products and services project their value to inexpert buyers. This cuts both ways, of course... If your price is higher than your competitors, you will be seen as high value. If your price is lower than your competitors, you will be seen as low value.
Using price as a proxy for value (or quality or desirability) is not a perfect model, but it works often enough that it remains a useful shortcut. In fact, shoppers almost can’t help using it. A price creates a first impression that is virtually impossible to unsee.
So ask yourself...
What “first impression” are your prices giving to your buyers?