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Costs don’t matter
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Yeah, they do matter, but not necessarily when pricing. If they did (costs), the price of any SaaS would need to be near to zero, since the cost is marginal because it's scaled up. If they did, the price for a flight ticket would need to be lower the fuller the plane is. Flights get all of their costs covered at a certain quantity of tickets sold (and that’s less than 30% of the seats). Hotel rooms would have to be almost given for free the closer to the end of hotel-day or when they’re getting over X number of rooms sold. Yet, they get more expensive. Restaurants and bars would have to give food away and/or tons of complimentaries, since their drinks are 400%+ in price compared to their costs. Or are you paying for something else? |
Rod Aparicio
Get one tip, question, or belief-challenge that just might change the way you market, to help your customers buy. A *daily* email for b2b founders on improving your business —without the bullshit.
Who told you it's greedy / needy / bad to have high prices? Who told you it's good to give discounts? Who told you that giving a discount is a show of appreciation? Who told you that a discount is "making the customer feel good"? Who told you that your offering is "too expensive"? Who told you you need to do what your competitors are doing? Who told you revenue is the thing to focus on? Who told you pricing is covering your costs and adding a margin? Who told you things are this way because...
A common belief is that over delivering delights your customers. That's a misconception. You can delight them with delivering on your promise. Over delivering entails expanding your costs without a defined scope. You train your customer to expect more than what they pay for. You train your customer that if you raise your prices, you'll expand the scope. You underprice your offering. Delighting your customers has nothing to do with over delivering. It has to do with setting expectations and...
It's pretty clear on a lot of replies to yesterday's email that under delivering is not the best option of them 3 (under delivering, delivering, over delivering). That's great. And even with that, you'd be surprised at how often a large portion of players in the market do under deliver. The bar is SO low that by doing a decent bare minimum, you kinda get away with it. If it's that obvious to you, what do you think make other businesses not deliver on their promise?