Price, choice and buyer psychology: how understanding these factors can increase your sales.

Posted on May 14, 2012 by andrew.gregson

In a Ted talk (http://www.ted.com/) a few years ago (http://www.ted.com/talks/lang/eng/malcolm_gladwell_on_spaghetti_sauce.html), Tipping Point author Malcolm Gladwell spoke about the role of choice in buying decisions. When discussing pasta sauce, the manufacturer wanted originally to know what the customer wanted. From that information they would craft a product to fit the customer taste. Was the customer demanding chunky, spicy or smooth pasta sauce? Market research came back with a carefully crafted statistical analysis showing that most people wanted smooth.

By offering only smooth pasta sauce, however, they would have missed market niches looking for chunky and spicy with a consequent loss of market share in pasta sauces. So the statistical answer was correct but insufficient for a business decision.

When you look at coffee sales, you get the same results. In focus groups some people will tell you that they like bold coffee with lots of body. Others like lighter roasts and yet others like it milky. But an homogenised market survey will show that statistically most people drink weak, milky coffee. Again, making a coffee for the mainstream market means foregoing some market share. Taking the statistically significant middle ground means that portions of the market on either side of the middle are not served by your product or service.

But too much choice is a sales killer. People like choice but not too much choice. They want an economical option, a middle of the road offering and a quality choice. They don’t want 57 choices because it is just too much information to have to absorb, digest and thereafter make a decision. Three or four and never more than 5 choices reflects the optimal options in a buying decision.

Too much choice, as a study of dating sites revealed (Economist: Modern Matchmakers; http://www.economist.com/node/21547217) leads to confusion with no transaction at all or where the potential “customers” boiled down everything to the lowest common denominator. On dating sites, and in speed-dating, the lowest denominator became physical attributes. In the business world that would be price.

Sometime in the late Jurassic, I worked for the largest appliance distributor in Western Canada. Although not directly involved in the sales operation, I went along to a sales meeting in preparation for a huge week long sale being mounted in Vancouver. The sales manager Derek, advised the sales staff that, of the 3 models, model A was the one with all the bells and whistles and sold for the most money. But there was limited inventory, so don’t focus on selling this one. The middle version was the one with the most inventory and best gross margin. This is where the effort should be focused. The 3^rd model was the cheap and cheerful model being heavily advertised. The sales manager advised them that if they sold a cheap and cheerful model, he would fire them. Although now discredited as bait and switch selling, the example is of

Can you use this strategy in your business? Are you offering an homogenised product at an homogenised price? Are you leaving money on the table from customers who would like the best option and are prepared to pay for it? Are you missing out on sales of an economical product or service that could increase your brand recognition, walk-in traffic and overall revenue?

Can you offer a good better best option?

Think of your struggles against the big box stores and their purchases of overseas products. The box stores sell on price alone and can beat you on price every day of the week. But they do not typically offer anything more than the cheapest available. But you can. On any given day, I might need a hammer. So, I go to your store and you have the cheap and cheerful hammer made in China hammer selling for $9.99. Right next to it you have a made in Canada model selling for $19.99. Today I have $15.00 in my pocket, so I buy the offshore product. I am not a contractor and use a hammer 4 times a year, so I don’t need the best, just something that will frighten the neighbours.

In the final analysis you cannot know your customer’s purchasing power without asking for their budget. You cannot know if the customer is a contractor or a weekend warrior, unless you ask lots of questions. In the absence of good information, offering a choice of products in a tier of prices is the best way to capture all the market niches and build your business.

The Politics of Business Debt in Canada

Posted on June 25, 2011 by andrew.gregson

Whether we like it or not, tax is part of life.

We pay taxes to pay for the delivery of public services like roads, harbours and airports and bridges. As employers, we remit payroll taxes; i.e.. we contribute to public and private pension plans, schemes to help workers hurt on the job, and unemployment insurance. But when these go unpaid, the taxation authority has huge and growing powers of enforcement. In this article, I will argue that not all debt is equal. Some debt is more dangerous than others and not even bankruptcy can save you from paying.

Simply put, some creditors have more power to enforce their claims than others. Although technically these creditors are unsecured and merely preferred they have the power to shut down your business, your life and everything in it. These creditors need to be paid first or negotiated with first. Why? Take this small, real life example. You may wish to pay $100,000 to a supplier first in order to keep materials flowing to the jobsite, but if a government agency scoops your bank account because you owe $6,000, then you are effectively out of business.

At the top of that list are government bodies. These are the tax collecting agencies like Canada Revenue Agency or Workman’s Compensation. They have the power, in only a few hours to get a judgment against you personally, and your company and freeze your bank accounts, padlock the doors, lien your home, and have all your receivables re-directed to the government. They can and will contact your customers to direct all monies owed to you to the government coffers.

And governing bodies, like Employment Standards, also enforce unpaid wage claims whether or not they are just unpaid or occurring as a result of a dispute. Even in a bankruptcy, unpaid wages get paid first and foremost ahead of any unpaid taxes.

Next on the list of dangerous creditors are enforcement bodies like Family Maintenance. They can, in British Columbia, enforce the payment of child support by putting a lien on your house making it impossible to re-mortgage. They can seize unemployment cheques, GST rebates and tax refunds.

Then finally there are property taxes which are enforced by a de facto lien on the property. Property can be seized and sold for back taxes. If instead you sell a property and the taxes are unpaid, then the taxes owing are taken from sale proceeds. Mortgages cannot be renewed with unpaid property taxes outstanding. And if outstanding a long time, the city or municipality has the right to seize the property and sell it. And even in a bankruptcy, the taxing authority has the right to claim two years of back taxes against the assets.

Just because it is the company that owes the money, by the way, does not always leave the owner clear of obligations. In some jurisdictions like British Columbia the old provincial sales tax became a personal obligation of the owners and directors if unpaid. Even in a bankruptcy, unpaid wages have a claim on the assets. In section 136 of the Bankruptcy Act;

(d) wages, salaries, commissions or compensation of any clerk, servant, travelling salesman, labourer or workman for services rendered during the six months immediately preceding the bankruptcy to the extent of two thousand dollars in each case, together with, in the case of a travelling salesman, disbursements properly incurred by that salesman …and.. commissions payable when goods are shipped, delivered or paid for..

Then there are secured creditors. These organisations have taken security against a loan to you. The security could be your house, the company building, equipment, and accounts receivable. Often this is registered as a General Security Agreement or GSA. The most common of course is a mortgage on real property. We are all aware that defaulting on a mortgage can lead to a protracted battle that culminates in seizure of the house and its sale to the highest bidder. What most people do not realize is that any shortfall in the sale proceeds net of mortgage payout, legal and realtor fees is immediately due and payable by the owner. That debt however is unsecured.

The second most common secured debt instrument in British Columbia is the Personal Property Security Act or simply the PPSA. This is the act that allows for repossession of equipment, vehicles and anything else pledged that is mobile, essentially. The act provides for right of seizure and for the shortfall on disposal of the asset to be a debt by the original owner.

And finally there are unsecured creditors. Typically these are credit card companies and your suppliers. The money you borrow from these people and companies, makes life simpler than trying to conduct business on a cash only basis, so of course, you have taken advantage of them. They can enforce their claims by closing your account and sending you to a collection agency. They report your travails to the credit agencies whose reports are then used to assess your further credit worthiness. Tumbling scores due to poor credit card management can restrict your ability to mortgage a house or get a car loan.

It must be obvious by now, that in programmes to restructure debt, due attention must first be paid to the danger quotient of the debt and its ability to hurt you and your business. This in turn, establishes the priority for attention, negotiation and repayment.

Finally, when the worry of debt is gone and cash is not totally dedicated to servicing that debt, you can Build Your Business. Remember that the people who worry least about money or a temporary downturn in business are debt free and have low fixed cost and you want to be there.

Contact Andrew to discuss your business debt and start a new business strategy:

Andrew D. Gregson B.A., M.A. M.Sc.(Econ)
http://www.pricingstrategies.ca
101-1735 Dolphin Ave.
Kelowna, BC, Canada V1Y 8A6
cell: (250) 859-0752
andrew@pricingstrategies.ca

Andrew Gregson has 15 years of experience as a business consultant to small and mid-size businesses in Canada, the United States and the Caribbean. To date, Andrew has analyzed and assisted over 130 businesses in the service, wholesale, distribution, manufacturing and logistics sectors ad is the author of Pricing Strategies for Small Business.

TIPS TO SUCCESSFUL PRICING . Part 1 of 5

Posted on January 24, 2011 by andrew.gregson

Always when I begin my speeches or my workshops, I tell the participants that I cannot instruct them to price their widget at $4.95. Rather, I plan to teach my audience advanced ways of thinking about pricing and several methodologies to help them make informed and intelligent pricing decisions.

Don’t follow the crowd!

For most small businesses, the everyday pricing regime starts with checking the competition’s rates and prices, and then following the crowd. This is even the recommended strategy in many popular guides for small business.

During the days of prohibition, 25 of Chicago’s top bootleggers were rounded up in a surprise raid. During their arraignment, the judge asked the usual questions, including the occupation of each suspect. The first twenty-four were all engaged in the same activity. Each claimed to be a realtor. “And, who are you?” the judge asked the last prisoner. “Your honour, I’m a bootlegger,” he said. Surprised, the judge laughed and asked,” How’s business?” “It would be better”, he answered, ‘if there weren’t so many realtors around.”

The upside is that this strategy is simple and easy. You don’t spend all that work, that time or your money to develop a unique selling proposition to command the full value for your services or product and you don’t have to go out of your way to be better than all the rest.

But following the crowd is a lazy strategy that leads to mediocrity.

Money is probably left on the table since the business is now just one in the herd and the product or service is sold at a price which is the average- where half of the competition is losing money. Remember that price is an indicator of quality in many customers’ minds. A standard service at a standard price does not compel a potential customer to buy from you.

Don’t get pushed around by the last customer you served. Being told that a competitor is selling cheaper can panic some business owners. Altering the price can lead to a permanent slide in margins and profits.

Rewarding the last complaining customer with a price reduction punishes the good customers who have supported your business by paying the full price willingly and uncomplainingly.

Remember that competing on price alone caters to the worst customers who show no loyalty and will hunt endlessly for the lowest price in town. My suggestion – find a way to make your company stand out and price accordingly.

Contact Andrew for your next meeting:
Andrew D. Gregson B.A., M.A. M.Sc.(Econ)
http://www.pricingstrategies.ca
101-1735 Dolphin Ave.
Kelowna, BC, Canada V1Y 8A6
toll free: (888) 959-0752
Andrew@pricingstrategies.ca

Profit Making Through Pricing at OUC with Andrew Gregson

Posted on January 18, 2011 by andrew.gregson

Profit Making Through Pricing
When it comes to your business and selling your product, have you ever wondered if there is just a better way of pricing that would allow you to compete better? Learn how to increase sales without dropping your price. Gain detailed analytical solutions needed to transform a humdrum business into a profit making machine.

This workshop will broaden your understanding of true costs, show you how to pre-determine profits and will teach you to price with confidence.

The workshop provides practical planning tools and processes, with case studies and practice sessions designed to enhance your business skills.

Course code: MGR 283, CRN: 80610
Feb. 22 & 24, Tue & Thu, 6 – 9 p.m.
$135 + HST

MISSION IMPOSSIBLE

Posted on January 10, 2011 by andrew.gregson

MISSION impossible: charge more, sell more and increase customer NUMBERS.

A common mistake made by business owners is to assume that their purpose is to set a price for a product rather than for the customer segment. Identical products or services can be sold at lots of different price and profit levels.

In the 1970’s, a Swedish manufacturer of mining equipment, sold worldwide, could not supply a much needed rubber grommet for its hard rock drills. When the situation became desperate, one resourceful area manager went off in search of an adequate replacement, in order to keep the customers’ drills working. After a few enquiries, the area manager was directed to a rubber component manufacturer in Vancouver. When he produced a much worn example of the grommet and asked if they could make this for him, he was astounded to be told that they had, in fact, made the original he had in his hand. He was even more astonished to learn that the over-the-counter retail price to him was less than 10% of the price he would normally have paid the mother company. Based on cost to manufacture, this small item warranted a low price. But in a drilling equipment application the replacement grommet was costly simply because it was a microscopic portion of the total machine price and an even tinier portion of the dollars per hour lost when the grommet failed and the machine stopped producing. Therefore, the price reflected not cost to make, but need in that market segment.

In a more recent example, the price of rare earth metals has risen as China restricts exports. Niobium is essential in every cell phone on the planet but the sharp rise in price has not had any impact on the price of cell phones. This is because only a ¼ of one cent’s worth of niobium is used in each phone. Sellers of niobium, whose customers manufacture cell phones, have vastly increased prices and profits but the price of cell phones has not risen.

Purchasers can and do evaluate your product or service in terms of reputation, durability, reliability, after-market service, freight costs, installation, inconvenience, and payment terms. Your business and your sales offering, needs to address important factors like these, in a way that means something to the customer. Otherwise price becomes the sole, only and determining factor that makes a customer buy from you instead of the competition.

The following three steps, with accompanying examples, illustrate how to do MISSION IMPOSSIBLE. Every businessman’s dilemma can be overcome using innovative solutions and result in increased sales, increased profits and more customers.

Analyze your customer and press the hot button

In 1954, DuPont introduced a new polyethylene resin used in pipe manufacture. Until that time, all polyethylene pipes had been made from a by-product of off-grade resin. While the new pipe looked exactly like pipe made from off-grade resin, it had a longer life than competitive pipe material and could withstand greater pressure.

After the product’s shaky entry into the market, DuPont developed a strong promotional program for the new pipe which communicated its notable benefits. Sales grew strongly despite the fact that extruders sold the pipe for between $9.50 and $13.00 per 100 feet vs. the $5.00 to $7.00 price for pipe made from typical resin. This price ratio, almost 1.9 is greater than the relative “lives” of the pipe would suggest a price imbalance.

But there was a secret in this strategy’s success. In a typical use of this pipe, a farm application, the pipe goes underground. It is clear that if the pipe bursts, it would have to be dug up- a time consuming and expensive chore. The value or utility of the pipe was greater precisely because the salesman focused attention on the pain of having to dig up burst pipes more often than was necessary now that new pipe was available. The sales programme was successful because it pressed the hot button labelled “dig all day in the cold mud looking for busted pipe”. At that point, the price difference became irrelevant.

market the BENEFITS not the features.

Unless your customer is an engineer, the latest product specifications are gibberish. Your new resin, new alloy or new gadget must answer the WIFM question if it is to be sold. WIFM = what’s in it for me?

It could be new drill bits with titanium points. They are harder and can drill longer without sharpening. But that has to become a tangible benefit by translating from “longer between sharpenings” to 14% more holes drilled. At that point, the potential user will price out his down time for drill changes and then the cost of re-sharpening. Price has become a secondary issue compared to the cost savings.

before setting price levels, examine the customer perception of what is a cost.

One manufacturer of laboratory instruments was plagued by a high number of very small orders for a limited array of repair parts. On analysis, the product manager found that end users were annoyed at having to place these small orders because the administrative and shipping costs were greater than the parts prices. Furthermore, the manufacturing company was losing money on the parts for the same reason.

Even more costly, customers were upset at the downtime caused by not having the correct and low value parts in stock. A few customers, with a multitude of similar model instruments, seemed capable of keeping the right mix of parts in stock but others, with limited experience, could not develop good inventory rules. To alleviate the problem, the product manager developed repair kits with an assortment of parts and offered them to customers using a wider variety of instruments. The company’s picking costs went down, average invoice value went up, profits went up, shipping costs went down, and customer satisfaction increased because instrument down time was minimised.

There are 3 common threads in all these examples.

In each, someone has done a careful cost benefit analysis from the CUSTOMER POINT OF VIEW. Even if the customer cannot articulate it well, the salesperson painted a vivid picture of the annoyance and costs of repeatedly digging up pipe, idle production because the right repair part had to be ordered, or down time costs whilst changing drill bits.

Secondly, the penalties were identified first, not the price. Price was introduced after the benefit picture had been painted in stark, primary colours

Thirdly, the price matched the customer specific situation and was MORE than would have been invoiced based upon cost and mark-up formulations.

Contact Andrew for your next meeting:
Andrew D. Gregson B.A., M.A. M.Sc.(Econ)
http://www.pricingstrategies.ca
101-1735 Dolphin Ave.
Kelowna, BC, Canada V1Y 8A6
cell: (250) 859-0752
toll:1-888-959-0752
andrew@pricingstrategies.ca
Andrew Gregson has 15 years of experience as a business consultant to small and mid size businesses in Canada, the United States and the Caribbean. To date, Andrew has analyzed and assisted over 130 businesses in the service, wholesale, distribution, manufacturing and logistics sectors.

Presenting @ BC Appraisal Institute of Canada – Okanagan Chapter

Posted on October 26, 2010 by andrew.gregson

Meeting Notice

Date: Tuesday, November 23, 2010 Time: 5:30 pm Bar Opens
6:15 pm Dinner
Place: Kelowna Yacht Club
1414 Water Street
Kelowna

Cost: $15 Chapter members
$30 Non chapter members

Presenter – Guest Speaker- Andrew Gregson, B.A., M.A. M.Sc. (Econ) – Andrew is the author of Pricing Strategies for Small Business. He has 15 years of experience as a business consultant to small and mid size businesses in Canada, the United States and the Caribbean. During these challenging times appraisers are facing pressure to lower their fees. Andrew will discuss how to keep up prices up and why lowering your fee will not translate into customer loyalty.

Please confirm your attendance by email, by Friday, November 19th, 2010 with:

Lionel Hoffmann lhoffmann@kent-macpherson.com or 763-2236 Ext. 105

HOW TO MAKE YOUR PRICE NON-NEGOTIABLE

Posted on October 26, 2010 by andrew.gregson

HOW TO MAKE YOUR PRICE NON-NEGOTIABLE

In a downward trending economy, customers will look for the best bargain and are bold enough to tell you that your price is too high. But keeping prices up while increasing sales is the key to a healthy bottom line. So, how do you achieve both?
Let us assume firstly, that in your sales pitch you have presented the price correctly, stressing the benefits of making this positive buying decision. Let us assume as well that you have conveyed these benefits in a graphic way that painted a compelling picture in the customer’s mind.
But the answer is still, “too much”.
Negotiating to a lower price means rewarding the grinder and effectively punishes that last “good” customer who paid your full price. So, first of all, be prepared to “fire” a customer who wants too much from you for too little.
But here are 4 tips on keeping your price and making it non-negotiable.

1. Humour. In my former business, we had customers who would brandish a clearly marked item, say $5.95, but still ask “what’s my price?” My best sales person typically responded with “Five thousand dollars but with your discount, today it is $5.95”. We never lost a sale with this approach. The laughter cemented a relationship and brought us referrals.

2. Plan B. If the first item has 16 features and is priced at $300.00, then re-direct the customer to a lesser item with only 12 features – pointing out what is being axed – but with a smaller price tag, of course. You are not yielding margin dollars here, just directing the client to a price point he can manage.

3. Be brave. Price is often an indicator of quality. German made cars are not really any more costly to manufacture. Diamonds can be found in the beach gravel in Angola. So their high price must mean more quality for the client, right?

4. Have a clear understanding of what benefit the customer is trying to purchase and direct your sales effort at that point. In 1954 Dupont introduced a new polyethylene resin used in pipe manufacture. Until that time, all polyethylene pipes had been made from an off-grade resin. While pipe produced from the new resin looked exactly like pipe made from off-grade resin, it had a longer life than competitive pipe and could withstand greater pressure. It sold at 1.9 times the price of the original pipe. The secret for success in selling the more expensive pipe was highlighting the costs of digging up burst pipe for replacement.
Be brave. In a sliding market your company must stand out, must be unique and must offer especially desirable benefits for the customer.

And one final word of advice comes from the owner of a Vancouver company who met prior downturns by dropping prices and struggling through with no cash in the bank. During this downturn, they kept prices up, cut costs and had cash enough to buy modern equipment further driving down costs, which generated more cash.

Andrew D. Gregson B.A., M.A. M.Sc.(Econ)
http://www.pricingstrategies.ca
101-1735 Dolphin Ave.
Kelowna, BC, Canada V1Y 8A6
cell: (250) 859-0752
toll:1-888-959-0752
andrew@pricingstrategies.ca

Presenting @ Kelowna Chamber – BIGGER PROFITS BY BETTER PRICING STRATEGIES

Posted on October 5, 2010 by andrew.gregson

Guest Speaker Andrew Gregson

BIGGER PROFITS BY BETTER PRICING STRATEGIES

Andrew Gregson has 15 years of experience as a business consultant to small and mid size businesses in Canada, the United States and the Caribbean. To date, Andrew has analyzed and assisted over 130 businesses in the service, wholesale, distribution, manufacturing and logistics sectors.

Pricing Examined This is a downward trending market right now. And it is sometimes difficult to keep prices up. Learn why lowering your prices will not translate into customer loyalty. Have you ever wondered if there is just a better way of pricing that would allow you to compete with the big boys? Would you like to increase sales without dropping the price? How can you become the price leader instead of the price follower in your industry? Do you think you may be leaving money on the table?

Ticket Prices: $15 each. Tickets must be purchased in advance. To purchase your tickets please register below. SEATING IS LIMITED.

RSVP cutoff is 4:00 pm on Wednesday, October 13th

Date: 10/15/2010
Time: 9:00 AM TO 10:00 AM
Location:
Kelowna Chamber of Commerce Boardroom
544 Harvey Avenue
Kelowna, BC V1Y 6C9

Event Location Map

Phone: (250) 861-3627

Learning from the world of art project funding – how price sensitivity is interpreted in a non-commercial world.

Posted on September 30, 2010 by andrew.gregson

Learning from the world of art project funding – how price sensitivity is interpreted in a non-commercial world.

Fund raising on line offers new insights into people’s purchasing habits. This statement is summarised in a recent Economist article ’the micro-price of micro-patronage’ and is supported by evidence provided by kickstart.com, a fund raising site for the projects of aspiring artists.

You would expect some of the conclusions. Too much choice means that no buying decision is made and the potential donor wanders off. And you would expect price sensitivity with clearly identifiable price bands each with its own characteristics. Contributions at $5, are considered a donation, plain and simple. Numbers north of $50 move from being a simple donation to being a purchase of something and the criteria change.

And the research shows that it is best to have a range of prices with some expense options to counter cheaper options. This is similar to the sales process of beginning with the most expensive and feature laden product first, and then dropping features and prices in lock step until the buy decision point is reached.

Finally, at the top end of the scale the “price” begins to bear no relation to the item itself. On offer at Kickstarter at a higher price point was the item PLUS an experience, like dinner with the author or artist.

How does this work for retailers and service providers?

Retailers who clearly understand that a good experience is part of the buying process can thrive. In the 1970’s a scion of the Cooper family opened a ladies clothing store in Guelph, Ontario. His patrons drove 100 miles to visit the store. Why? Because the store was equipped with a play corner to keep the kids quiet while Mummy shopped. Same goods as other stores, but Mummy shopped there because the buying experience was less stressful and more enjoyable.

Theme restaurants understand this concept. That is the strength of the Macdonald hamburger concept; and the Red Rooster idea. Service providers with a unique style that gives the customer a good story to tell their friends and family understand this concept. Lots of plumbers arrive in dirty blue overalls in a filth covered truck and do a great job at a great price. But that is no story. Would you tell your neighbour about it?

THE MOST BRILLIANT MARKETING STRATEGY EVER

Posted on September 27, 2010 by andrew.gregson

I will argue that a business owner must see his business as a battle to create differences between his own bakery and Billy’s bakery across the street. Customers strive to reduce everything to the most easily comparable factors – apples to apples – and dollars per unit. This is how they make the buying decision, by boiling the decision down to the simplest common denominator.

This is how commodities like flour, pork bellies and water are traded on the world market – on price alone. The lowest price sells. If the higher priced commodities do not sell then might end up sitting on a wharf.

A successful business strives, on the other hand, to steer away from selling on price alone. After all, there is always someone with a lower price – a big box store, a back yard mechanic or a tailgate renovator. The successful sales strategy is to make the product or service so highly desirable, nutritious, refreshing, sexy and so distinctive that they will have the neighbours “oohing” and “aahing”.

In the 1970’s when Ford Motor Company was having huge quality problems in its Lincoln models, the company brass instructed the sales people to phone and ask customers about the performance of their new cars. This created a torrent of warranty claims from all dealerships across the country – except for one. At that dealership the sales staff phoned to ask How the Neighbours liked the new Car? This time the response was totally upbeat because the sales manager tapped into the reason that people bought the cars in the first place- vanity and one-upmanship.

If your business wants to be successful, then price needs to become the second and poor cousin. Value is what most customers and most clients want.

In your store or sales presentation, value should be offered first and price last. You alone can prevent the customer from taking the easy route and making a comparison on price only.

How will you describe where the value is? What makes your product especially good and a benefit to all who buy it? Is it healthful? Will it save time and money? Will it reduce pain and anxiety? Will wearing that suit make you look like a million dollars? Will all the women want you?

If you are selling something where everyone knows the price, like crude copper, say; what is the value proposition in dealing with your company? Is it the payment terms? Free delivery? Just in Time delivery? Have you got the sexiest sales staff?

What value is buried in the price that you can separate and bring into the sunshine so that your customers can say “ooh” and “aaahh”?

However, if you are unconvinced and if you truly believe that your business can only compete on price alone, consider this. There is a product made from two commodities – water and flour – both of which are sold worldwide on price alone. In turn, this mixture of flour and water should be the perfect commodity product. Right?

Well, this dried paste of flour and water has over one thousand different market niches and price points. And the manufacturers have done this not by changing the use of this food product or even its flavour. The Italians have altered only one variable for this product – the shape of the food!!?? It’s brilliant! It’s pasta.

Contact Andrew for your next meeting:

Andrew D. Gregson B.A., M.A. M.Sc.(Econ)
http://www.pricingstrategies.ca

101-1735 Dolphin Ave.
Kelowna, BC, Canada V1Y 8A6
toll free: (888) 959-0752
Andrew@pricingstrategies.com

Andrew Gregson has 15 years of experience as a business consultant to small and mid size businesses in Canada, the United States and the Caribbean. To date, Andrew has analyzed and assisted over 130 businesses in the service, wholesale, distribution, manufacturing and logistics sectors.
Andrew owned 3 businesses in Vancouver and dominated his market segment for 13 years. In 1997, he sold the business and went to work for a Chicago based management consultancy.

Andrew Gregson’s book “Pricing Strategies for Small Businesses” is based on the experience accumulated over many years of working with his clients in North America. Andrew is a graduate of Simon Fraser University, the University of Western Ontario and the London School of Economics.