Melanie
Welcome to the Monday Morning Marketing Podcast for all decision makers and action takers. Take it away, Esther.
Esther
And welcome back to another episode of the Monday Morning Marketing Podcast. Today, we're joined by Charelle Griffith, business and marketing strategist, even, at charellegriffith.com. Welcome, Charelle. How are you today?
Charelle
I'm good. Thank you so much for having me.
Esther
You're so welcome. So, Charelle, we're going to be talking about pricing strategy, something that a lot of people struggle with because we never know how to price our products, what way to get the pricing out there. There's so many questions. So let's start with just a brief explanation of who you are and why you are so eligible to answer our questions today.
Charelle
So as I was introduced, my name is Charelle Griffith. I am a business marketing strategist that's been in marketing for over 10 years. I actually am a charter marketer and pricing is an essential part of marketing. Not everyone always realizes that. Some people see it as outside of marketing, but it's not. It's one of the seven P's is pricing. And it sits very much in this world of how to combine everything you're doing in marketing to make sure it works well. Your pricing can't be thought of in isolation. And I'm a big numbers geek, so I geek out on pricing and spend way too much time on spreadsheets.
Esther
Love that. So you mentioned one of the seven P's. Name them all.
Charelle
Oh, are you really going to... I don't know what. I don't really have to do it a long time now. I'm like, Oh my gosh, don't test me.
Esther
Product, place, price,
Charelle
People, processes. Another one, I can't remember the last one. You did well.
Melanie
We'll get them in the show notes. So when it comes down to pricing structure, obviously, a lot of our listeners are either mostly established, but there are also some startups that are listening to us or certainly at the beginning. How often does your pricing need to be changed? What things do we need to include to make our pricing structure as fair as possible for both customer and for us as well?
Charelle
Usually, I recommend you look at your pricing at least once a year. That's my bare minimum. You can absolutely do it more often, but I think unless you're in a particularly fast moving industry, that usually, especially as a small business owner, it can do more harm something that does good. So my benchmark is usually to do it once a year. And part of the reason of doing that is you will, as part of your review of pricing, is look at competitors. And I'm really conscious about people not getting stuck in comparison items getting obsessed about what everyone else does. So I feel like once a year is a really good time to be able to stop, to be able to look at what's happening around you, look at what's happening in your business, and then revise your marketing, your pricing from that position.
Esther
Okay, So what things do we need to keep in mind when we are making our prices? So you said there about reviewing your competitors. What other things are non-negotiables when it comes to your price cannot be so low as that because you need to include?
Charelle
Yes. And this obviously will differ slightly between being a product-based business and a service-based business. I predominantly work with service-based businesses, and I actually feel like product-based businesses get this usually a bit better because they've got real fixed examples of costs. So for example, you could be someone that's setting up one pricing strategy that's cost plus, and that's where you work out what is the physical cost of creating that product, of being able to ship it out, all of those things. And then you're like, well, then I'm just going to add a margin on. And so that is something that is very common in the world of products. It's just, especially if you own a range of products, it might be you always work out what is that cost And then you say, fine, I'm going to add on 20%, I'm going to add on 50%. And that means you know that you are going to be always making a profit. Now, what that doesn't necessarily consider, though, is all of the other costs of running your business. That's very much just looking at the cost of that product. And so you need to be looking at both things. You need to be looking at what are all your costs to provide a product or a service, as well as what are the rest of your running costs? To try and be able to work out how much you need to be able to sell across the year to then actually be able to be like breaking even and making a profit in your business as a whole.
Melanie
Okay, I've got a question now.
Charelle
Go on.
Melanie
It's quite customary, isn't it, for businesses to put their prices up every year or so? Finding the bravery to do that can be quite hard. And the justification for it. What suggestions would you give our listeners Because it doesn't matter when you're listening to this podcast. It's going to be the end of the year at some stage. So how much should we increase it by? And do we need to justify it, Charelle?
Charelle
So, firstly, good point about you don't need to do it a certain time of the year. I find it quite natural, so I do a lot of annual planning with businesses and we'll do reviewing pricing going ahead of a new year, whether that's their new calendar year or their new financial year. But whenever you're listening to this podcast, if you haven't reviewed your pricing, in last twelve months, last 12 months, and you can do it right now. You don't have to wait. Raising prices is actually quite funny. It's definitely an issue that a lot of small business owners find it really hard to raise their prices. And yet big businesses do it all the time and we just swallow it and we get on with it.
Esther
So true.
Charelle
I literally just saw someone recently that quite a few software companies that seem to have majorly hiked their pricing and people are kicking enough about it. But as small business owners, we're like, oh, I can't put it up. So there are, I think it comes down to you giving warning for something. So this does, again, depend, probably. If you're a product and people come on your website and there's not maybe that much repeat business, it's not going to be as if people are sitting on your website checking out and they're going to be like, oh my gosh, I can't believe they put it up by a certain %. There's probably not going to be that many people that are watching it that hard. If you've got a subscription, which obviously is much more in the software space, which is why we all notice it because we're like, well, I was paying this every month and now suddenly that's gone up. Usually what you'll find is people will give people forewarning. They'll say this is going to change at a certain date. So don't wait until the day before you're going to change your subscription. Give some people some forewarning. And in the service space, I actually feel as if, again, this giving people notice can be actually a very powerful marketing tool. It actually can get some people off the fence, some people that want to work with you, that have been thinking about it. If you're very honest about the fact your prices are going to be going up, and this can be the last time they can work with you at a certain rate, that can make some people move across the line. Actually, you don't need to see it as a negative. So basically, the short version is wherever possible, try and give people forewarning, particularly if it's something that they're repeatedly paying for or you know that you've got repeat custom, and so they will notice it. But as a whole, I think worry a lot less than you are because it's very standard. The last few years, we have been living in a phase where inflation has been going up and up and up, prices across the board are going up. There's no difference between a big... Everyone understands that the price is just going up, and that means as a small business owner, you also are going to need to raise your prices.
Esther
That's a good point.
Melanie
Can I do a quick follow-up question there? I know normally it's older Esther taking over the mic here.
Esther
Old? She just called me old.
Melanie
Steady now. Now, let's think of seasonal times where pricing is a real issue. Like Black Friday, Christmas. There's all these Easter, summer, where the pricing structure is changed, and there is an expectation expectation where it needs to be cheaper. Now, looking at Black Friday, I think that's one of the hardest ones of the year because there's an expectation it's going to be slashed in half or more to get better prices. So how can you advise people to still offer their best price but still pay the bills and keep the lights on?
Charelle
Yeah, this is such a good question. Discount accounting offers, they are something that really fascinates me. So this is where your pricing strategy needs to have been made in advance. So one of the things I say is if you are going to take part in Black Friday, you need to have already decided that. Actually, what you will realize is a lot of companies will have, when they've been working out their margins for what they are charging, there is such an increase. The percentage margin that they've added on means that they can offer considerable discounts without it having a detrimental impact. And that's why you need to know your numbers. You need to actually understand how much of a discount can I give before I'm going to get to the point where now I am paying? I am physically losing out by doing that type of discount. Knowing that number in advance, one, is super helpful. Two, knowing if you are going to be someone, take part in Black Friday, you want to do the Christmas sales, or even if you personally as a business, it might be your business that says, on our birthday, we like to do a big anniversary sale. Knowing that at some point in the year, if you are going to discount, means you need to be taking that into consideration when you are revising and resetting your prices, when you're doing that annual review. Because there is a big difference between someone who is reviewing their pricing, knowing, I'm always always going to pay it, always going to price at full price for the whole year, versus someone who knows multiple times through the year, you are going to be discounting. Now... Go on.
Esther
No, no, keep going.
Charelle
Sorry, I thought you came back. So now if you are someone who might have been like, I didn't do that, and now I want to take part in Black Friday, or I want to take part in the Christmas sales, and I'm worried about it, there are, I suppose, a few ways to look at that, which is if you are going to use this as a way to get new customers in, for example, you're going to have an increase in sales. That strategy of you pricing below what you should, so you're not making enough money is called a loss leader. And that is a tried and tested strategy. People use loss leader strategies where you don't make enough money on what you're selling because when you get those people into your business, you're going to try and upsell or you're going to try and... You've got a plan for how you're going to make more money from them in the long run. So that's what your challenge needs to be. You need to accept, Okay, fine. Maybe in the short term, I am going to lose money because I'm going to take part in Black Friday. But is this going to bring thousands of people maybe to your business and then you got what you're going to do with them afterwards? Or is there another reason? So that's the thing you need to think about is loss in a short period of time isn't the worst, but you need to have a plan for how that's going to work for the business in the long term.
Esther
That's very interesting because we never really consider the lost leaders as a viable option sometimes, especially as small business owners. We're going, well, if I sell this at seven, and I will ask you in a minute why seven is a magic number. But if I sell this for seven instead of 27 or 97, am I really going to Is it really going to be worth it? Is it going to be worth the promotion and is it going to be worth the time and effort that I put in to trying to sell it as well?
Charelle
I mean, I generally, without knowing anyone's business, without all that type of stuff, I usually am for for more business owners, discount is a very dangerous area to get into unless you're thinking about it properly. It's very easy for you to end up losing a lot of money and we don't necessarily have all the infrastructure and all the processes in place to be able to make that money back in the long term or just to really use it to benefit the business. So I'm always like, think very, very carefully about discounting. And this is where I really recommend you knowing in advance. So people that know that they're going to be taking part in advance, as I said, then you can build that into your pricing. And that's what big businesses do. They know that's going to be something. They're not assuming that they're going to make all of their sales across the year at 100%. And the thing is always as well is there's ways to do it. You could be someone that says you cap it, and so you only sell a certain amount of number at that discount. And that can mean then you're not leaving yourself open to too many sales that are going to be at a discount rate. I've seen it with subscriptions where people will do the first month is cheap and then it goes back up. So there are ways if you want to take part, particularly if you feel that pressure to take part in a Black Friday, to do it without it totally wiping out all your profit for the year.
Esther
Yeah. Because I know that a lot of companies, big companies, would raise their prices for a while and then bring it back down. You see this, this was such and such a between this date and this date, and now it's really cheaper.
Charelle
I haven't been in that world for a while to remember what the rules were because it was like it had to have just been for so many days in the past, as long as it had been in that price, then you can advertise it's been reduced. So you are spot on. That's what people do.
Esther
Okay, so getting back to magic number seven.
Charelle
Yes.
Esther
What is so special about it? Because I always see seven, 27, 97. Why seven and not 5 or a round number?
Charelle
So if that is classed under psychological pricing. So this is a strategy where we're trying to avoid the... Usually it's the next bracket of price. So in terms of if you were going to sell something for £100, £99 or £97, you can see both of them get used, means that most people then aren't thinking of it in the next price bracket. So it's actually for you as a business owner, that's only a difference between £1 or £3. But for some people who are like, oh, well, I didn't want to spend more than 100, but physically because it starts with a nine, they're seeing it as a 90 something rather than 100. So that's why you'll see lots of sevens, lots of nines. I think in some places, I can't think of an example now. I do also see fives. I think five, seven, and nine at all use. But yeah, it's basically trying to, psychologically, make people think it is cheaper than it is. It also can be very, very good if you are... Anything that has any type of search. So if you have something where people are looking for gifts under £100, for example. If you put it at £100, you wouldn't show up. Whereas if you're putting it as £95, £97, £99, then you get included in that bracket. So if you're anyone that sells anything that has those types of marketplace websites or anything where people can build a search, again, that will help you to show up to more people.
Melanie
So my question now is about the different pricing layers. So there's an intro a standard price and then a premium price. Like coffee shops, for instance, they have these three prices, and let's face it, most people go for the middle one. I assume that's a psychological thing as well. Is this something that we can encourage our listeners to start doing?
Charelle
Yes. So the three options, when I think about it, I always think of when you're on a website, again, something you see quite often with software, where they'll be like, this is the intro, And then the middle one, they'll usually have most popular above it. And so it's or and normally it'll be like that one's in a slightly different colour and it seems a bit bigger than the two either side. So it automatically is drawing you in. And it absolutely is something that you can be doing with your business. Now, actually, what I usually advise people when we're looking at this is how are you making not only... Because obviously the big business is most popular, we never actually know if it is or isn't. But actually, if you want people to go for that, how How have you built that package? Because usually it will be multiple things that are included in it. How do you make it feel the most appealing? So this is where you're really looking at the pricing of those three options and then comparing what you're offering to be like, does this middle one look like the no-brainer? Because if you make that one appear like the no-brainer, so it feels like, for example, it's maybe not that much more than the intro option, but you get a lot more that people think, oh, I'm only have to pay a little bit more and I get all these additional things, that seems like a real bargain. Now, it might be that realistically it's because the way you priced the first one means that actually that's like you were doing it at the top. So if someone is paying for it, they are realistically... They're not saying they're not getting value for money, but it hasn't been necessarily as good value for money as the middle one because you wanted more people to get into that middle one. So you might have been a bit more friendlier with the pricing on it. Now, also then having a VIP option, having that premium, that third option, that's always is really useful because some people will buy it. So there's always going to be some people in your world, some people in your target market, your audience that will buy that VIP or premium option. And so by you having that, not only are you giving your business this option to have a product or a service that can make a lot more money, which can be really beneficial to your business. But also, again, it's helping to position that middle one of being like, oh, if they have this one that's really expensive and it's all these things, then actually I'm getting a good bargain by going for this middle option.
Esther
Great. That brings me nicely onto another question about putting your prices on a website.
Melanie
So you're going to say pudding then? I thought you were going to say pudding.
Esther
Are you hungry? Putting your prices on a website, especially when you have a more bespoke service or thinking of ourselves who are website designers, it's not just a simple, a brochure website will cost you this, a normal website will cost you this and an e-commerce will cost you this, because we have to factor in how many pages, how many products, how many moving parts there are to it, how long it will take us to make it. What are the pros and cons of a service like ours putting prices on or not onto the website?
Charelle
So when we said we're going to talk about pricing today, that was the one question I thought I hoped you'd ask. I'm glad you brought it up. Because it's one that really divides people, people that Don't put your pricing on your website. Do put your pricing on your website. I am someone that says, If you can put your prices on your website, I'm definitely someone that doesn't see the need to be getting people onto calls of you making them inquire, go through this whole long process. I think transparency and being upfront is better for both parties. However, as you said, there are situations where there is a bespoke nature that you can't just put this as a flat price. And there I would always just suggest, though, can you at least be putting a from price so that it is just giving some people some idea. Because I don't see as a business owner, why would you want lots of people that are contacting you if you're totally out of their budget, for example? It just doesn't seem to me, it doesn't seem to make sense. I know people that do it. I know it works very well. People that can sell really hard on a sales call and they think they get more people through to their business by not being upfront about the price and they will sell really hard. That's just not my style. So for me, I'm like, if you've got a fixed price, put it on your website. If you've got a varied price, try and put some from pricing to give people some ideas. So at least then when they come through to you, this should be better for you that people haven't a It's a rough idea and therefore, hopefully, it's going to improve your conversion because there's not lots of people then being like, oh, that you're way more expensive than I was expecting. And so then they don't buy. Do you currently have your pricing on your website?
Esther
No,
Charelle
No.
Melanie
I do.
Charelle
Oh, one-on-one.
Melanie
It might be worth asking our listeners, actually. Send us your comments and let us know if you currently have your pricing on your website or not, we'll let Sheryl know. She can start building a bit of a poll.
Charelle
I can't wait. And as I said, there are definitely reasons not to. And I think sometimes there aren't. But I think on the whole, I'm definitely for put them on.
Melanie
So is there any other questions that we should have asked? You held out on that one. Is there anything else we should have asked?
Charelle
I think the only other thing that I would think about when it comes to pricing that is important to think about is you have to think about it in combination to your positioning of your business. And so what I mean by that is if we think about the whole thing about in supermarkets, it's like an easy example of being like, if you're a budget supermarket, so if you're like, Asda in the UK, if you're Walmart in the US, and then you're trying to charge ridiculously expensive premium prices, those two things don't go together. And so whilst you can look at what your competitors are, you could check out what your profit margins are and work out what you feel is comfortable with. And you can be making sure that you've worked out what your break even is, and you can feel like you're going to meet all your financial targets for the and all that stuff. If that has meant that you have raised your prices to a point which doesn't match your branding, you are going to struggle to sell at that price. And so what you really need to be looking at is your positioning of your business, your overall branding and marketing and your pricing together. They all need to be cohesive. And if you are getting to a point where you might have raised your prices and you aren't making those sales, that's what you need to go and look back at. Because if they're not working together, you can't just raise your prices I respect everyone's going to pay it. There needs to be cohesiveness between your branding, your position, your marketing, and your pricing.
Melanie
So we can't just raise our prices. I'm gutted by that.
Charelle
I mean, maybe it might be actually right now, you have a more premium-positioned business and actually your prices aren't as premium as they could be. So it's not saying you can't. But what I'm saying is just if you do it purely in isolation, sometimes that's where I see people that go a bit too far. They think, Oh, I'm just going to keep putting them up. Keep putting them up. I'm like, But what are you... Look at your business. Are people going to feel like they have to align? That's all.
Esther
Very useful information. Very good tips. I'm sure all our listeners are dying to put these all into practice. If they come up against any hiccups or problems, how can they contact you for help in this?
Charelle
So I do have a service. I have a price in power where I help people to set their prices for the first time or review and revise them. All the information is on my website, which is at charellegriffith.com.
Esther
Brilliant.
Melanie
If all outros were as easy as that. Thank you so much, Charelle. Considering this isn't one of the shortest podcast we've ever done, you've packed in a huge amount of information. So I really do hope people listen back to this, get the pen and paper. I've got to say the the old podcast notes are going to be quite informative and fairly extensive. So if you've got any questions, you know how to find Charelle now. So, so pleased to have you back on here, on here for the It's time for the first time. We will get you back on again. I don't know where I was going with that. But this is our time to say goodbye for now. We're going to be back next week with another podcast. But say goodbye, everybody, and we'll speak to you soon.
Esther
Bye.
Melanie
Bye, everybody.
Charelle
Goodbye.
Melanie
I have no idea what I was on during that. Lord, help me. That was hard.
Esther
Brain fog at its best.
Melanie
I just think this week, being Monday morning, this week is just going to be mental.
Esther
Everyone, stay back. Stay away. Stay away. Beware. Beware.
Melanie
Please don't. I want your business.
