Price communicates. Your brand messages might say to your customers, “We value you,” but your pricing practices often refute your claim – whether you realize it or not.
Monetization and revenue strategy expert Marco Bertini emphasizes this fundamental lesson in a new Harvard Business Review (HBR) case study. Though fictionalized, the organization’s challenge is very real: under pressure to improve the bottom-line, do you risk upsetting a core customer group – and the company’s ethos – by introducing a new revenue stream?
The HBR case doesn’t provide the answer (yet) – it will be featured in its entirety in the magazine’s September/October print issue—but Bertini, who strongly believes in shared-value pricing, offers important clues.
“A company’s pricing strategy must be aligned with the brand, especially when the core customer has an emotional investment in the product,” explains Bertini, an ESADE professor, and recognized authority on the psychology of pricing and how it’s used to create and grow value.
His popular study of the 2012 London Olympic Games is shared-value pricing in action, and it offers several takeaways for doing it right – for the brand and its customers.
- Focus on relationships, not transactions. Value customers more than their money by fostering mutually beneficial relationships.
- Be proactive. Managers often price in reaction to competitive moves or customer complaints, but rarely based on what matters to the customer (their needs).
- Put a premium on flexibility. Inflexible pricing schemes reduce total value by making it difficult for firms to adjust prices in response to changing needs or to better share value with customers who perceive product value and features differently.
- Promote transparency. Many companies maintain opaque pricing schemes to maximize revenue and minimize churn. Not surprisingly, this often backfires.
- Manage the market’s standards for fairness. A company’s pricing strategy shouldn’t be at odds with its customers’ expectations of what’s fair.
Challenged by pricing problems? Bertini can help you embrace pricing as an opportunity to strengthen relationships and grow your brand.