Marketing Idea No. 228 – How to use pricing to create value for customers

Pricing is probably the least used strategy of all. Its given very little importance as a strategic tool and used more as a tactical tool, more like an afterthought, more like the final frontier, more in the domain of Finance or Sales where the sales team, finance team or occasionally CEO states what should be the price of the proposed product and service. And in most cases a competitive pricing or a cost-plus pricing is used.

But by doing that, the strategic value of pricing and how pricing can be used to create value for customers are both often ignored, because neither the Finance team nor the Sales team are focused on strategic direction of the company. Which is why something as simple as including VAT & Tax into your final product pricing makes a lot of value for a customer, but is almost always missed.

The natural tendency of company is to pass any burden on to the customer or the regulatory body. Which is why company always states the unit price of the product separately and then only after customer pays for the product in the sales counter she comes to know the applicable VAT & Tax – as if the company wants to say that this is what i ask of you, dear customer and this is what Government forces you to pay. But a significant more value addition (last time i checked, that is the role of the brand) for a customer from a company’s point of view would be simply to calculate the VAT & Tax of the product, mention it separately in the price tag along with a joint, total price. Therefore if the credit card bill is $32 and 10% tax is applicable on that ($3.2), then the total bill of the customer will be original price $32 + VAT & Tax $3.2 = Total asking price $35.2. Now thats a small helpful touch that will give the customer a total picture, without really incurring any economic cost to the company!

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