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The Art of Value Proposition
The 7 Ps of marketing are the enhanced elements that serve as a basic framework for assessing and adjusting your marketing strategy and have been thought of as the core of a good marketing plan. People, Process, and Physical have recently been added to the original 4 Ps of Product, Price, Place, and Promotion.
Our previous article covered the 1st of the 4 traditional elements of the marketing mix – Product. In this article we’ll focus on Price.
Price refers to the amount your customer is willing to pay for your product and is the only marketing element that has a direct relationship with your revenue and bottom line. As members of the print industry, most of the items we produce are custom manufactured and priced on spec based on your customer’s requirements. Understanding your costs is critical to determining your price, as this is the basis that you must establish first before applying your mark-up.
Determining mark-up is not an easy formula. There are many items that need to be considered and, in the end, there is no right answer. Ask yourself the following questions:
- What is your customer’s perceived value of your product? Do you have a reputation of being low priced or premium priced and does what you deliver reflect that value? Often this is not an absolute value but a range of what your customer expects to pay.
- How are your competitors pricing similar items and what additional benefits can you offer that will allow you to price it at a premium?
- If you believe that your costs are lower than the rest of the market, will pricing it low provide you with the advantage of much higher volumes than pricing it at market rates?
- Does your production department have downtime where the equipment is idle? If your customer is open to being flexible on deadlines, you can provide a pricing incentive to schedule it during this downtime to fill capacity and cover more of your fixed costs.
- If your plant is at capacity, it may be time to increase your mark-up to test the market and see whether this volume can be maintained. This can also be done seasonally if you have busier times of the year.
The advantage of the Price element in your marketing strategy is that it can be adjusted quickly to account for changes you see in the market. We see many printers who are hesitant to tinker with their pricing strategy, even though it may not be working effectively for them. Don’t be afraid to test the market, monitor the effect it has on your orders, and adjust accordingly.
If you need help evaluating your pricing structure, contact us! Our experts are here to help.
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Ken Freek and Drew McLaren are experts at Connecting for Results, a management consulting firm serving print companies across North America. Ken combines his experience in marketing, operations, automation, change management, and supply chain and logistics to provide a solutions-oriented approach to business challenges. A former company owner and marketing expert, Drew’s experience running a family print business gives him a leg up with decision makers. Both Ken and Drew excel in identifying new marketing and sales growth opportunities. To work with them, contact us!