> Pricing system & associated strategies. Ultimate Gross Profit Margin Optimizer. _
As we saw in the previous chapter, a pricing system differs from a business model. Now that we’ve articulated the latter and know how to distribute value to our customers, we must assign prices to our various offerings.
To do this, we need to start with a short, pragmatic look at pricing in general and its effects on your business.
If you lower your prices or they are too low, you will suffer the effects listed in the left-hand column of the table below.
Conversely, if you increase your prices, you’ll see the effects in the right-hand column.
| La course vers 0 € | Afficher des prix élevés | |
|---|---|---|
| From the customer's POV | ⬇️ Emotional investment | |
| ⬇️ Perceived value | ||
| ⬇️ Results | ||
| ⬇️ Customer lifetime value | ||
| ⬆️ Demandingness | ⬆️ Emotional investment | |
| ⬆️ Perceived value | ||
| ⬆️ Results | ||
| ⬆️ Customer lifetime value | ||
| ⬇️ Demandingness | ||
| From your business POV | ⬇️ Profits | |
| ⬇️ Perceived value of the business itself | ||
| ⬇️ Perceived impact (results) | ||
| ⬇️ Service level | ||
| ⬇️ Sales team conviction | ⬆️ Profits | |
| ⬆️ Perceived value of the business itself | ||
| ⬆️ Perceived impact (results) | ||
| ⬆️ Service level | ||
| ⬆️ Sales team conviction |
To avoid a race to “who’s the cheapest” and prosper for decades to come, there’s no secret ... follow the criteria of the perfect business.
You have to sell magic that doesn’t cost much to produce at a high price and on a recurring basis. And, of course, we avoid short-term profits that degrade the customer experience.
Here’s an illustration of what we mean:
Copyrights: Hyperstonk. (Click on the image to zoom in)
Instead, it’s all about creating a pricing system contributing to a positive customer experience. The perfect avatar must feel they’re getting a great deal. They must be able to tell themselves they’re getting a lot of value for very little money.
Copyrights: Hyperstonk. (Click on the image to zoom in)