Will I? Which one? These are two questions your customers answer every time they deliberate about a purchase. Will I buy a product (or service) in this category? If so, which one will I buy?
Will you buy chips at the grocery? If so, which one, Doritos or Lays or …?
Will I? — In an established market, pricing lacks the ability to influence someone to buy in a product category. Somebody will purchase in a category when they believe there is enough value for them in the products in that category. You can either build products in categories that people want, or use marketing to convince them they need a product in your brand new product category. Either way, relatively small changes in price have no effect on customers’ decisions whether or not to buy in the category.
Which one? — Price plays a huge role in this decision. Once a potential customer decides to buy a product like yours, they compare your products with your competitors and make a decision based on which one will give them more for the money. Which one gives them the most value. Which one meets their needs at the lowest cost. In any thoughtful decision process at this stage, price is an important factor.
As pricers, we will focus almost exclusively on “Which one?”.
Action: Talk to your customers. Have conversations with them and in the process work in the following questions: What other products (or services) did you consider? How did you decide on this one? What other sales channel did you consider? How did you decide on this one? The answers to these questions are crucial to our pricing decisions.