On pricing: your company reputation matters
Product pricing is also company pricing The Swiss army knife is not a good knife; it's not a good can-opener; it's not a good corkscrew. It's not really good at anything. But for certain personas, like those lost on a desert island, a Swiss army knife might be just the thing. How do you get visibility in a world of products and service? How do you make a business as a consultant or coach? You need a method or framework or skillset that can't easily be found elsewhere. Sure, you can do the job. But can you prove it? What makes you different? In the eyes of a customer. Innovation. A new way to solve a problem. Have you solved a problem or developed an approach that solves a real problem? I used to really enjoy Mystery Science Theater 3000 (www.mst3k.com). The idea was that you could watch a movie with some funny friends who would make caustic remarks through the entire video. Some of the comments were lame; some were hilarious. But sadly, the business model was crippled by the movie industry's licensing methods. It just got too hard to embed these remarks in a movie, which is why some of the funniest ones were truly obscure films--the only ones that MST3K could license. Now fast forward. With a little innovative thinking, the RiffTrax people have kept the tradition alive (www.rifftrax.com). Without bothering with licensing. RiffTrax offers the same funny commentary for many, many movies… in MP3 format. Download the track, sync with the DVD, and throughout the movie you can hear their audio remarks in sync with the video. The opening of each track tells you when to press "play" on your iPod. Voila! MST3K, alive again. Cool, eh? (I just bought RiffTrax for the original Star Wars trilogy. Take that, George Lucas!) Expertise. Built into product or service. Have you got a capability or experience that others don't? Maybe it's your framework, like Pragmatic Institute has offered in product management since 1993. Maybe it's your understanding of a method, like using games to elicit customer requirements as Luke Hohmann does with Innovation Games (www.innovationgames.com). Maybe it's your expertise, as Alan Armstrong offers in win/loss analysis for complex software sales (www.eigenworks.com). Years ago I was the product manager for a network management tool. We had developed it for our own use, as our original business idea was to manage company networks. And I'm talking big, far-flung, massive networks here. Our target customers were large sites that moved money on their network so uptime was critical. They loved our pitch but didn't have confidence that such a small company had the resources to handle their large-company needs. "But," they wondered, "what tool were you planning to use?" Turns out the tool that we developed to enable this service was unique in the space since it was designed for huge networks and the other tools simply weren't. We'd built our knowledge of handling large networks into a tool that could help a small team manage a large network. Our customers wanted the tool with its embedded expertise, not the service. When pricing a product or service, then, you need to build a reputation, and continue to build upon it. A reputation is not a promise of what you want to be or what you promise to do. A reputation is a history of delivering on your promises. A reputation is the trust that people place in your expertise or innovation. And your brand results from that reputation. What are some other ways that you build a premium priced product or service? (Please don't say creative logo or clever marketing).
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