When Sara Blakey launched Spanx (now a billion dollar company), she decided to price her new-to-market pants higher than her competitors. She felt they’d stand out that way, rather than disappearing amongst other cheaper pants.
She was offering quality, and wanted this reflected in the price.
But she’d also had experience in sales before. She’d been selling fax machines door-to-door. No one had heard of Dax, the fax machines she was selling, so they were all buying Canon fax machines instead.
She tried to go in cheaper; to make Dax the affordable brand. No one bought them. She made them the same price as Canon. Still, everyone stuck with the brand they knew. Then she priced them higher and people took notice.
Now, people were thinking: what makes the Dax more expensive; what can it do that Canon can’t? And it gave her an opportunity to extol the virtues of the Dax fax machine. She started making sales.
And so Sara applied this same theory when she launched Spanx. She wanted people thinking: but why are they more expensive? They must be better than the other pants.
One of the first challenges you face, when launching a business, is how to price up your product or service. There’s basic maths involved to ensure you aren’t making a loss but other than that, it’s about how much profit you want to make.
It’s also about how you want to be perceived: are you the affordable, accessible brand? Or are you the exclusive, special one? Perhaps you want to sit in the middle of these two – mainstream but known for being good quality.
With my courses, I want to be affordable but not so cheap that I’m undervaluing the content.
I know, from feedback, that people take one of my courses like ‘Becoming your own Boss, ‘DIY PR’ or ‘How to launch a successful online course’, pick up new skills and go on to make money.
So when I charge £97 to share this knowledge, via an easy-to-follow, in-depth online course, it’s good value. And when I give weekly feedback or email consultancy with it, the course costs £299.
I could charge more for my time, but I like connecting with people on the courses and so I don’t want to make it prohibitively expensive.
I know my customer, and she’s like me: willing to invest in herself and her career but not super-rich (yet).
Something else I’ve learned from Sara Blakely is that discounts can cheapen a brand. If you offer too many sales, you become the discount store. And that’s not who I want to be. So I’ve decided to cut back on the sales.
How have you priced your product(s)/services? Where are you hoping to sit in the market? What are your thoughts on sales and discounts?
Interested to hear your thoughts…