Category: Pricing Strategy

Box Of Fruit

Posted on by Steve Sammartino

While sitting in the reception of an ad agency a delivery came to reception that had us gobsmacked.

                                    fruitbox.jpg

A box of fruit. Which sells direct for between $20-$50. Plenty of margin there. What I loved about this was the simplicity. The barriers to entry are non existent. Think of the concept today, revenue next week. Start up cost close to Zero.

Although it is easy to copy (there are now 3 of these operators in my City), it has a natural lock out device built in. There’s only room for one player in each office block. It’s a personal service where the relationship is core. Anyone can bring there own fruit to work – cheaper, so it isn’t price driven. Once you’re in, it would be very hard for another player to push you out. It also builds the things companies buy; brands & distribution.

Back to the gobsmacking… my busines partner and I swore that our next business would be as simple as a ‘box of fruit’.

Old World / New World

Posted on by Steve Sammartino

put an ad on TV

 spread your idea virally 
sell to consumers collaborate with community 
modify for the masses overwhelm a niche 
compete on price charge what it’s worth 
focus on volume focus on revenue 
sell through intermediaries no middle man 
use spin to trick consumers be transparent and authentic 
mass media, mass production digital networking, craftsmanship 

Theatre at transaction v 3.0

Posted on by Steve Sammartino

Tom at Panther House points us to Espresso Art. I know I keep raving on about theatre at transaction…

 

Theatre doesn’t have to be expensive. In this case a net cost of zero.

Theatre always allows premium pricing. Theatre spreads.

Do any of my readers know the address of a coffee house in
Melbourne that does this? I heard there is a place in
Richmond somewhere.

3 Price Tags

Posted on by Steve Sammartino

Every product or service has 3 price tags. We’ve been trained to focus on the first. Occasionally we consider the second and the third has been largely ignored in the post war era. I am sure there is some kind of economic model developed at Harvard to explain this phenomenon, but I’ll give you my simple version instead.

 car sale

1st Price Tag: The cost of purchasing the good or service. Usually represented in a dollar amount.

 

 

 

2nd Price Tag: Cost to use, maintain or hold the product or service. The dollars you need to spend on it to get the value in use.

    

 

 

 

3rd Price Tag: The wider environmental, social or personal cost. 

     

   

 

 

The 3 price tags don’t live on separate islands. Just like any complex economic, social or biological system they all interact. Think Newton’s 3rd law. (yes, deep down I am a nerd) Unfortunately, for the last 30 years most companies, brands and governments have ‘pretended’ that this isn’t so.

 

What an opportunity. There is a myriad of ways we can leverage the 3 price tags. The first of those being to admit an interconnectedness.

Toyota have done an amazing job on this with the Prius Hybrid car.

The 1st price tag is a premium ($40k-$50k), but it more than pays off on the 2nd (1200km per tank of petrol) and 3rd price tag (90% less emissions). Both of which beat every other car on the market.

No surprises that Toyota cannot keep up with demand for the Prius. Never ran an advertisement on TV either! Interestingly it’s the 3rd price tag that makes the emotional connection with consumers. There’s a 3 month waiting list for a Prius in an Industry which is constantly announcing plant closures, mass redundancies and financial disasters.

Ok, you don’t have to go out and save the world to leverage the 3 price tag insight. It’s a reality in all product and consumer segments. Entrepreneurs who build a strategy considering all the 3 prices can really have an advantage – a path to market.

Which industries are currently ignoring price tag 2 and 3? Maybe you can be first in that market with this insight and give them a marketing lesson.

Theatre at Transaction

Posted on by Steve Sammartino

In a recent blog entry “4”  I described my version of must haves for any start up opportunity. One of these was was Theatre At Transction. While wondering through Melbourne I came across a perfect example. The store is called KoKo Black. 

They have been written up previously on Springwise. This small firm knows the leverage of the theatre.

At 11am on a Saturday morning there were more than 20 people watching a brand being built, literally. By the time I got my camera out the crowd had dissipated . But you can see the concept. Koko Black have managed to do what Cadbury couldn’t conceptualise.

choclate making  

They only do chocolate. That’s it. But they are the experts. Classic single minded proposition. All five senses in action at retail level. Eat in or takeaway. Breakfast lunch and dinner, chocolate is the only thing on the menu. Their retail concept is very clever. They have a viewing bay where you can watch the gourmet chocolatiers in action. After all old is the new new. The emotional connection is made in a way that can’t be done with TVC’s and interuption marketing.

The net result is a price of beyond $100 a kilo. While old world cadbuary languages at $12 per kg. Who do you think will profit in this category in the future,  the specialists or Mr Glass and a Half? In an obese world, the treat from the specialist will win every time.

If you’re in Melbourne go and check them out in the City, Carlton or Chadstone. A lot of great learnings for any entrepreneur.

Trick Pricing

Posted on by Steve Sammartino

 

You’re a smart person.

You don’t get duped very often.

You know a scam when you see when.

You’re even smart enough to know that $9.95 is really $10.00

See, I told you that you’re smart. Now, given the condescending nature of my tone here, do you think any of your customers wont be smart enough to know this? Now that you have answered this question please ask yourself why you would ever engage in such trick pricing for your customers.

At last, we’re entering the age of ‘authentic capitalism’, and $0.99 cents isn’t fooling anyone. In fact, you’re quite possibly embarrassing yourself on a commercial level and damaging your brand or start up. The threshold price point is the biggest hoax in consumer marketing.

My suggestion, is to have honest pricing.  Charge to the dollar. Make it simple and gain respect simultaneously. Your customers wont mind, really.

Who wants a pocket full of change anyway?