Monday, April 22, 2013

The Four P's of Marketing for Belly Dance: Part 2

The Second "P":  PRICING
Once you develop your product – whether it’s a new class, a workshop, a show, a line of jewelry or costumes, etc. – you’ll need to figure out what it’s worth to your consumers. The business model behind it comes into play here, of course… the price has to have enough margin built in that you can make money on it! But from a marketing standpoint, the important part of pricing is understanding what price the market will bear, how to discount your offering – if you must – to achieve your revenue and profitability goals, and importantly, how to communicate your pricing clearly.

How do you know your pricing is right?
  • Again, pay attention to the market and do some research. Your best and easiest benchmark is what others are charging for similar products. But – (back to the objectivity issue) think carefully about whether your product is really the same as the ones to which you are comparing it. Are their earrings silver-plated and yours are sterling silver? Your product will be worth more to the customer. Are their workshop instructors nationally-known, while yours are more like “hidden treasures?” You may have to accept the fact that to the customer, your product is not worth quite as much.
Do you need to discount your product? 
  • A commonly-discussed concept in marketing is “training the consumer.” For many larger events, consumers have been trained to expect “early bird” discounts, and that’s something you may just have to deal with. This drives early registrations so you can get a sense of how well the market is responding, drives revenue so you can start covering costs, and generates word-of-mouth awareness. You will need to limit the discount by time, quantity, or both. Back to the business model – you just need to determine how much you can discount your product and still make a profit. 
Once you figure out your pricing strategy, it must be clearly communicated so it’s not confusing to the customer. Customers may give up if they go to your web site and get confused. At the very least, you will create work for yourself if you have to answer questions. Make it easy for customers to understand your pricing and easy for them to buy your product.

Ready for Part 3... PLACEMENT?  

1 comment:

  1. I wanted to share some additional pricing considerations that were sent to me by a reader...

    Consider price elasticity:
    "If I lower the price of my product, how much more will I sell?"
    "If I raise the price, how much less will I sell?"
    "If we learn that a resource is becoming scarce, will people scramble to acquire it?" (e.g., Saroyan Zill Mania, sold out Rachel Brice workshop)

    Other price discussions:
    Price discrimination - is the price the same for everyone (i.e., student/senior discounts, volume discounts for multiple classes/workshops)?

    Is the product really the same (i.e., many charge the same for "a workshop", say $30 for each 90min workshop in a 2 day series. But are all the same? Can't a workshops with Mardi Love demand a price premium over a workshop with Miffy Unknown? And is a Friday 4pm workshop really the same as a Saturday 11am time slot?)?

    Bundling - i.e. some workshops require you to buy whole day packages, while others allow a la cart selection of workshops. Other bundling practices that distort the price include incentives such as "you can be in the show if you buy x number of tickets/workshop slots."

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