This issue is our first in this new format. Hope you enjoy it!
It allows you to access our back Pricing Results issues (see the index in the left column) so you don’t miss any pricing strategies!
Quick overview of innovation
What does innovation have to do with pricing strategy? Quite a bit, actually!
Recently I sat through a keynote speech from Doblin, a leading consultant on innovation. It was very thought-provoking.
They’ve identified 10 different types of innovation, concentrated in 4 categories: finance, process, offerings, and delivery (see more at www.Doblin.com).
Doblin found industries tend to concentrate innovation in just a few of the 10 types – resulting in high competition and high difficulty. They recommend companies instead look to innovate in areas not currently being used by their competitors – in order to find more sustainable innovation.
They got me thinking about how this could apply to pricing strategy and pricing competition.
How you can use innovation in your pricing
Most of your competitors are competing on actual price alone. This puts you in a hard-to-win scenario. But… what if you could “innovate” in a different area of pricing than out-of-pocket? What if you could compete differently?
What if all your competitors were selling books on one topic for $27 – but you changed your offer to a book plus something else? For a higher price? Example: We tested just this for my brother (and partner)’s book on web design.. We tested $27 for the book vs. $37 for the book and ½ hour of e-mail consulting. The $37 book plus consulting offer pulled substantially more orders than the $27 book-only offer. (And because the book is so clear, just 10% of buyers take him up on the 1/2 hour of consulting.)
Another example: World Tennis magazine sold a lot of ads in the issues before and after Wimbledon. So did Tennismagazine and their other competitors. But when publisher Chuck Stentiford offered a “Wimbledon Package” that included ads, list rentals, a trip to Wimbledon with plane, hotel, match tickets, and a meet-the-players party (for $thousands more!), he changed the offer structure. He “innovated” his offer, thus removing the competition and making it easier to pull in much larger profits.
How could you innovate your price structure? Can you change terms, change quantities, or lower one part of the price while adding on another? Add a “frequent buyer” program? Bundle your offering with something valuable?