While most restaurants sell Philly cheesesteak sandwiches for $4-5 apiece, Barclay Prime owner Stephen Starr sells his for $100. Served with a small bottle of champagne, Barclay Prime’s cheesesteak is made of sliced Kobe beef, melted Taleggio cheese, shaved truffles, caramelized onions, and shaved tomatoes on brioche bread brushed with truffle butter and homemade mustard.
Could you sell a simple sandwich for $100? I’m not sure I could, but this raises an interesting question: How do we price our goods and services? Here are some pricing strategies that should help.
Monthly Payments. Offering a one-time payment for customers may be easy, and for some businesses, it works like a charm. But if you offer services, setting up monthly or even quarterly payment schedules can be really beneficial. It allows for a consistent point of contact between you and your clients. Personally, when I send monthly invoices, I ask for feedback, send project reports, and offer reasons why their business benefited from having me on their team. This way, my clients see that I am doing more than just asking for their money each month; I am adding something valuable to their own businesses.
Prestige Pricing: Higher prices usually mean higher quality. Luxury brands are the perfect example of this strategy. Simply improving your delivery or promise of your product can justify a higher price. Our friend in the example above who sold his sandwiches for $100 increased his perceived value by offering a bottle of champagne and homemade mustard making it the Starbucks coffee of the sandwich world!
Tiered Pricing. This is very common. Cable companies offer a “good” plan including 40 channels, a “better” plan including 60 channels, and a “best” or “premium” plan including 100 channels and free installation. Fast food restaurants offer a burger, a combo meal, and a large upgrade combo meal. Pricing tiers change a buyer’s concept of quality. They don’t normally opt for the lowest-priced option because they prefer to purchase a product that is better or even the best you have to offer.
What strategies do you use in your business’ pricing? We would love to hear what works for you.