Using Science to Ensure your Price is Right

Pricing strategy on its face doesn’t seem complicated. The goal is to get as high a price as you can to ensure you have enough margin to make a profit, while also moving inventory at a sufficient rate. So, the strategy is often to move the price around until you find the sweet spot that hits all these metrics. 

However, like most things that have to do with customer behavior, it isn’t as simple as that. There are other variables that can affect your pricing strategy success, and understanding them will help you find that sweet spot faster.

In this episode, we investigate pricing strategy and tactics that organizations use to inspire the customer behavior they want. We also talk about the two levels of pricing strategy to consider as well as some practical advice on how you can apply it to your pricing tactics. 

Key Ideas to Improve your Customer Experience

Pricing is great in that it produces excellent quantitative data. You can see you sold X amount of product or service at a specific price. Lower the price by ten percent and you can see that you sold Y. Modeling with data can show you a lot more about customer behavior related to price. Unfortunately, what quantitative data can’t always show you about pricing is the psychological effects pricing has on customer behavior. That’s where we come in. 

Here are a few key moments in the discussion:

• 03:58   Ryan talks about the two ways to try to understand pricing and the concept of price elasticity.
• 10:34   Ryan explains the two levels of pricing strategy for different brands: individual pricing and general pricing image.
• 13:04   Colin shares a story about what he learned about making mistakes in general image pricing with a grocery store chain in the Southeastern US.
• 16:25   Ryan explains how the common tactics we associate with pricing (aka, sales) work on the individual level impressions.
• 17:55  Ryan shares the two general principles for pricing that affect customer behavior around price.
• 26:05  We share practical advice about what you should do with this information.

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Customer Experience Information & Resources

LinkedIn recognizes Colin Shaw as one of the 'World's Top 150 Business Influencers.' As a result, he has 289,000 followers of his work. Shaw is Founder and CEO of Beyond Philosophy LLC, which helps organizations unlock growth by discovering customers' hidden, unmet needs that drive value ($). The Financial Times selected Beyond Philosophy LLC as one of the best management consultancies for the last two years. Follow Colin on Linkedin and Twitter.

Click here to learn more about Professor Ryan Hamilton of Emory University. 

Why Customers Buy: As an official "Influencer" on LinkedIn, Colin writes a regular newsletter on all things Customer Experience. Click here to join the other 22,000 subscribers. 

Experience Health Check: You already have an experience, even if you weren't deliberate about it. Our Experience Health Check can help you understand what you have today. Colin or one of our team can assess your digital or physical Customer Experience, interacting with your organization as a customer to define what is good and what needs improving. Then, they will provide a list of recommendations for critical next steps for your organization. Click here to learn more. 

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