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Top Tips to Better Pricing
By: Rafi Mohammed, PhD
Posted: May 27, 2011, from the June 2011 issue of Skin Inc. magazine.
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Reinforce to employees that it is OK to earn high profits. Many skin care professionals are uncomfortable setting prices above what they consider to be “fair” and are quick to offer unnecessary discounts. It is fair to charge what-the-market-will-bear prices to compensate for the hard work and financial risk necessary to bring products and services to market.
Realize that a discount today doesn’t guarantee a premium tomorrow. Many people believe that offering a discount as an incentive to trial a product or service will lead to future full-price purchases. Offering periodic discounts serves price-sensitive clients, but often devalues a product or service in clients’ minds, which may impede future full-price purchases.
Offer product versions. One of the easiest ways to enhance profits and better serve clients is to offer good, better and best versions. These options allow clients to choose how much to pay for a product.
Use pricing tactics to complete your client puzzle. Skin care facilities should think of their potential client base as a giant jigsaw puzzle. Each new pricing tactic adds another client segment piece to the puzzle. Normal Nancys buy at full price (value-based price), Noncommittal Ninas come for treatment series discounts (pick-a-plan), High-end Harriets buy the top-of-the-line products and treatments, and Discount Donnas are added by offering 10% off on Tuesday promotions (differential pricing). Starting with a value-based price and employing different tactics adds the pricing-related segments necessary to complete a skin care facility’s potential customer puzzle, generating growth and increasing profits.
Because pricing is an underutilized strategy, it is fertile ground for new profits. The beauty of focusing on pricing is that many concepts are straightforward to implement and can start producing profits almost immediately. What better pricing windfall can your skin care facility start reaping tomorrow morning?