Pricing is an art of its own
And marketers aren't given enough time to put proper thoughts into it.
This morning I commented on a Growth Marketer’s LinkedIn post on steering away from mindless discounting for eComm brands, and wanted to share with you too:
Pricing is an art of its own, and marketers aren't given enough time to think it through or conduct testing.
Most agencies are also incentivised to focus on outputs, not long-term business outcomes.
Pair these two aspects together, and discounting becomes your go-to strategy.
Before you steer away from discounting:
Setting the right expectations with your management and the wider team (i.e. managing up and internal alignment) is an important aspect.
I've experienced this first-hand many times when management demanded us to offer discounts again once they see the CVR drops. Or worse, offer more aggressive discounts once they see we're about to not hit the weekly sales volume targets.
See how focussing on outputs instead of outcomes is a major problem?
A few of the many things I've learnt over the years, though not all apply to eCommerce:
• Conditional sales incentives can help move stock or bring in another user (growth loop).
• Delayed gratitude incentives can help with recurring revenue while increasing product adoption and usage.
• Try giving away marketing dollars instead of profit margins (e.g. use what you'd have spent on ads as a referral bonus).
• Giving away free merch = losing product cost on your end, but gaining RRP perceived value on the customers' end.
• Probably not applicable to eComm, but I'd say the pricing model is more important than how much you charge (I'm a fan of usage-based pricing). What feels fair to the customers?
A few resources for you to start learning about pricing, discounting and unit economics:
Profitwell's blog (a Price Intelligence software recently acquired by Paddle) - mostly on SaaS pricing: https://www.paddle.com/resources/topic/pricing
SBO Financial's blog - they're an accounting firm providing services for eComm brands and digital agencies well-known in Brisbane. Its founder Jason Andrew is not a fan of mindless discounting either and has some gems in his book, email newsletter and blog: https://sbo.financial/blog/
Use the Van Westendorp research technique to help define a range of acceptable product prices: (Often known by Product people as the 4 questions): https://www.surveyking.com/help/van-westendorp-analysis
Gabor Granger Pricing Model, another research technique honing in on a specific revenue-maximizing price point: https://www.surveyking.com/help/gabor-granger
Until next time,
Josiah