Can You Really Start Uncovering Your Hidden Profits Today Through Better Pricing?

Posted on December 2nd, 2006 (1 Comments)

Unequivocally YES!

Authors are really paranoid about their book cover pictures and I must admit that I was too. A year before my book was published, a friend of mine published a book and I was really impressed with his book jacket picture. My friend’s picture was really great, I had to hire his photographer! I called the photographer, Tom, and he immediately agreed to do the shoot for $425. A pretty reasonably price I thought (I would have paid double).

On the appointed day, we shot several pictures in Cambridge and I tried not to look too nervous. After the shoot, Tom mentioned that he was interested in fine-tuning the pricing of his photography services. The problem he explained was that “potential customers call me all of the time (like I did) and I have one shot to get the job, so I set a low price.” Sound familiar? Most businesses share Tom’s challenge. So we set off to the Thai restaurant across the street to discuss pricing.

Over a delicious lunch, I explained to him the concepts of value, lessons from an auction (different customers have different valuations), and the multi-price mindset. He clearly faced customers with different valuations for his services. Families desiring a family portrait are generally willing to pay less than uptight authors that want good pictures for their books. Similarly, corporate titans are generally willing to pay more than authors for a great picture. So, how could Tom set different prices for these customers with different valuations? It’s really as simple as offering early bird, regular, and chef’s table options (low, medium, and high priced options). Offer these options and let customers self-select the one that that best reflects their true valuation. Throughout the remainder of our lunch, we brainstormed over how to create early bird (limited shots, limited touch ups), regular, and chef’s table options (more shots, more touch up time). Tom left intrigued, wondering if this new pricing strategy would really work for him.

The next morning, Tom called and our discussion went something like this:

Rafi (nervous): “How are the pictures looking?”

Tom (excited): “Fine, we’ll discuss that in a minute. Rafi, I used the early bird, regular, and chef’s table strategy this morning. Two potential clients called and when I offered them these options, they both selected the chef’s table!”

Rafi (excited): “Awesome!”

Tom (excited): “I’m going to make so much money off of this pricing strategy!”

Rafi (nervous): “So…how are the pictures.”

Tom (nonchalantly): “Oh, they are fine…you look a little nervous.”

Pictures aside, I was so happy for my new friend Tom. He is great at his craft and he deserves to profit! Is he taking advantage of his customers? I don’t think so. There are plenty of competing photographers in Cambridge that customers can choose if they don’t like his pricing and his pricing strategy offers choices. This simple pricing strategy tweak allowed Tom to start uncovering his hidden profits immediately.

So…how much hidden profit can you start uncovering today by simply offering early bird, regular, and chef’s table options?

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