When it comes to your bottom line, pricing your products and services is essential. Price it too low and you can’t keep the lights on. Price it to high and nobody will buy it—and you still can’t keep the lights on. So how do you increase your margin (and keep the lights on)? Make sure your pricing is correct!

However, pricing correctly is more challenging than it may seem at first. Most companies assume that increasing your margin is a matter of marking up your costs enough that you can make a profit. But there is more to it than that. In some cases, companies don’t mark it up enough, and then they still don’t make a profit. 

In this episode, we explore the psychology of pricing, the difference between pricing products vs. services, and what you can do to help your customers compare your pricing to your competition, and pick your offer over theirs.

Key Ideas to Improve your Customer Experience

If you get the price wrong, you go out of business. So, there is a lot at stake with pricing. However, there is a lot at stake for in these decisions for customers, too, and they usually have even less information than you do. In other words, pricing is tricky, especially for services, which are not easy for people to compare. 

Here are a few key moments in the pricing discussion:

• 02:24   We begin the discussion about the difference between products and services, and the different challenges with pricing and comparing them.
• 09:15   Colin shares a story about how a low price can send the wrong signals, too.
• 12:05   Ryan explains how Reference Points can help customer evaluate intangible items. 
• 14:46    Colin shares and example of what Anchoring can do for your pricing, and how to pay too much for things in some cases.
• 16:56    Ryan explains that in some cases people will use environmental cues to make decisions when pricing is difficult to assess. 
• 22:12   We talk about the signals that the dollar amounts in your pricing send and how prepayment can affect customers’ perception of price.
• 27:24   We share our advice on how you can use what you have learned about the psychology of pricing to increase your margins and get your pricing correct.

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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. 

How can we help?

Click here to learn more about Beyond Philosophy's Suite of Services.