Pricing, value and marketing ? is there a common denominator?

rink of dreams

Working on the "rink of dreams" project in Ottawa

This morning, thinking about the foundation ?dig? in our house and the advertisements of totally unrelated products and services on this website and in our printed publications, I?m drawn again to the paradoxes of pricing, value and marketing.  Nothing seems to add up that well ? at least at first sight.

We chose our foundation contractor because the business passed some critical relationship and reputation tests, and happily agreed to pay $1,600 for the job, at least $600 less than the immediate direct competitor and I think perhaps an order of magnitude less expensive than some services in the industry, which would have advocated a complete engineering study and foundation dig.  Our contractor, however, seemed to feel a bit uncomfortable charging any more than he did for the service, recognizing the time and resources it required (two guys, less than a day, and a mini-backhoe.)  We probably, if we knew what we were doing, could have found a guy to do do the digging for $500, happy to be making that much for a day?s work.

Then there are advertising and marketing services.  It turns out I will be able to trade out my marketing consulting services to the foundation contractor, so on a cash basis, our costs have reached zero.  I?ll on the other hand deliver probably three times the standard service to the contractor; with editorial publicity, consulting, ideas and advice at a level that, if my sales team promised the same, I would be less-than-enthusiastic about their work.  They, however, did some great work this month.  We?ve sold several thousand dollars in advertising for the ?Rink of Dreams? community project in Ottawa.  The Ottawa Senators Foundation has chipped in, even, with a cash payment and an offer of a ?box? for a upcoming game.  Thus we?ll be able to treat our clients, employees (and my own family) with some seats which can cost more than $100 each if you paid for them directly at the box office.

You can purchase a link ad on this site for $12.00 a month or less.  Or you can spend upwards of $2,000 or more for an advertisement in one of our regional or association-related publications.  Is one better than the other; will one type of advertisement really draw that much more response or interest than than the alternative?  I cannot say.  But the prices are certainly different.  Is the value really that much different, however?

This blog posting may appear confusing, and that is intentional.  I?m hoping you can see that pricing, value and marketing all mix up in one big picture and the relative relationship between them is often quite uncertain.   Value is defined largely by the marketplace and perceptions of potential clients.  Online advertising generally ?sells? at a price tag one or two orders of magnitude than conventional print media, but we are still able to sell the print advertising because of the way we connect, relate and contribute to the community (and because we can authoritatively offer consulting and other resources about online advertising without charging extra).  Foundation work can cost hundreds or thousands of dollars; the true fair price depends on what needs to be done, your tolerance for risk and (in some cases) your ability to provide reciprocal value to the contractor.

I simply ask you to think differently about your pricing than the actual cost of your services.  Of course, you cannot price below your cost ? or you will lose money, badly.  However, can you package your service and present yourself in a way (to a relevant market group) that values your services well above the physical cost of providing them?  If you can, you?ve discovered the secret to marketing success.  (And, no you need not spend a fortune on the actual marketing to achieve this objective ? in fact, spending too much will simply increase your costs, and that isn?t the goal here.)

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