What grade would you give your product? Your marketing? Your price is that grade.
One professor in my MBA program really stands out. The weekly classes were fun exercises where class participation was important. However at the end of the term the professor said, “Instead of me giving you a grade, give yourself a grade. Submit it to me and I will decide if you really earned it.”
Wow. We were being asked to rate ourselves, but we had to be honest because he was the final arbiter.
Price is just like that. As a company you invest time and resources developing a product or service to create real value. You then invest more resources in marketing and sales to make sure that value is communicated to your customers. When it is all over, you have to price it. You have to decide how much value your customers receive from your efforts.
Pricing is just like grading your company on how well you created and communicated value. If you did well, then you price higher. If not, you price lower.
Just like my professor was the final arbiter of my grade, your potential customers are the final arbiters of your prices. They will let you know if you price too high, because they won’t purchase from you.
When you think of pricing like self-grading, the quality of product development and the effectiveness of your marketing suddenly take on a new perspective. Do your best to earn an “A+” and your company will thrive.
Mark Stiving is a pricing strategist, runs Pragmatic Pricing, and is the author of Impact Pricing: Your Blueprint for Driving Profits
Want to read more by Mark Stiving? Read this in-depth guide to how to price your products: