How to price: Step Five

In 2008 Self Counsel Press published my book - Pricing Strategies for Small Business. The purpose of the book was to make available to the owners of small companies, pricing techniques used by sophisticated and large companies to improve their bottom line. Since that time I have discovered that most owners are largely indifferent to the opportunities presented by better pricing. The focus after the past seven years of terrible economic times is still on cost cutting and growing sales at whatever cost, ignoring a truly powerful business tool. I believe that finding the time to experiment with pricing is almost always beyond business owners struggling with sales, staff, regulations and taxes.

The question most asked of me when I have given speeches on pricing is how to price their product or service. Clearly this is beyond the scope of a quick 10 second review. But demonstrating six or eight different methods in use today was clearly not quite enough.

So the purpose of this fourth article and the following final article is to create the five steps to finding your price using a workbook approach. The steps in this workbook format are: know your competitor pricing, define your USP, know your customer, price and demand relationships, and the marketing environment.


Step 5: Marketing environment

In 1991, CBS’s 60 Minutes program ran an episode about the French Paradox. In that segment, they tried to explain the low incidence of heart disease in France where everyone ate lots of fatty foods (butter, cream, cheese). The solution to this conundrum, the investigators claimed, was that the French drank red wine and put forth a scientific sounding explanation.

The French wine exporters pounced on this and ran full page ads in US newspapers crowing about the positive health impact of a glass of red a day. Sales soared. Prices rose. As similar pattern emerged when oat bran, yoghurt, alkaline water, and echinacea were highlighted as health givers.

In February of 2015, Terry Reilly, of the CBC radio show Under the Influence aired a tremendously insightful examination of the impact of weather on sales. http://www.cbc.ca/radio/undertheinfluence/sunny-with-a-chance-of-mouse-traps-how-weather-affects-marketing-1.2957608?autoplay=true. In this episode, O’Reilly describes how the people behind the Weather Network convinced Campbell Soup to exploit a small bump in chicken noodle soup sales when the weather turned rotten. Instead of just letting it happen, the weather network fed information to Campbell’s to enable them to advertise chicken noodle soup heavily three days before bad weather hit and made people miserable. The result? A tremendous bump in sales.

Consider the price of champagne. Champagne is fizzy white wine, when all is said and done. It costs marginally more to make but sells for a significantly higher price. Why? Because the manufacturers have convinced us all that a meaningful celebration of life, success, marriage, sometimes divorce, graduation, birth and any Hallmark holiday can only be celebrated properly with a bottle of bubbly.

These are three instances of a marketing environment affecting price. In the first, an accidental but favourable review was pounced upon to drive sales and prices. In the second instance, data mining was used to exploit a changing mood and bump sales, although not in this instance, price. In the third instance, the manufacturers set out from the beginning to convince us to pay more for their market segmented, highly differentiated, USP driven product.

So the final part of your workbook must be to include these marketing environments that influence your pricing. What do you control? What can you influence? What factors put you in the driver’s seat? Even the tiniest thing can make you master of your universe and the price driver in your market place.


I owe a huge thanks to Rafi Mohammed for his insight and attempt to create a structure based on the theory of pricing.

This column focuses on business problems and how to solve them. Andrew Gregson, BA, MA , M.Sc.Econ is an economist, author and a Senior Partner in iNTENT Financial Inc, a Kelowna based finance and consulting company. The 3 partners specialise in finance, pre-determined profitability, sales and marketing. If you need further information, please contact us through the website at www.intentfinancial.com.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Andrew Gregson, BA, MA, M.Sc. (Econ), holds a Master's Degree in Economics from the London School of Economics.

Andrew's experience working with an international business consultancy and being a business owner for 15 years was the impetus for his book "Pricing Strategies for Small Businesses". He brings his expertise in finance, pricing and debt restructuring to the table to help struggling manufacturing and service companies to return to profitability. This has helped companies to rebuild value and often to sell at much higher dollar values.

Andrew has contributed to trade journals, "Spark" on CBC National Radio and has been a guest speaker at business networking groups, colleges, universities on his topics of expertise - pricing, exit plans and debt. He is also a frequent contributor to blogs and online postings for business help.

Andrew is currently the President, Board Of Directors intent Financial Inc., his role is overseeing intent Financial Inc., Intent Investment Corporation and other related ventures.


Website link:  www.intentfinancials.com

Contact e-mail address:   [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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