Do you remember the story of Goldilocks?
Here’s a short refresher if you don’t:
Goldilocks was a young woman who once stumbled upon a house of three bears.
(Ridiculous, I know!)
She was confused.
Which of the three things should she pick?
She searched until she found just the right porridge—not too hot, not too cold, but just right.
Then the right bed.
(Talk about invading someone else’s home!)
Yes, you get the point!!
Your pricing strategy is not much different.
There’s a magical “just right” price point for your product or service.
A price that delivers maximum value to your customers and maximizes your profit.
🤔 What is the ‘Pricing Sweet Spot’?
Imagine the pricing sweet spot as your brand’s Goldilocks zone.
It’s the ideal price point where:
- The customer perceives the highest value
- Your business makes the most profit
Well, it’s not always easy to find.
But once you do, it’s like striking gold.
Why is it important?
Because your pricing plays a major role in your brand positioning.
Apple is a prime example of a brand that has nailed its pricing sweet spot.
Their products aren’t the cheapest, but customers happily pay for the value they believe they’re getting.
They’re laughing all the way to the bank.
🧐 Market Research = Starting Point
Market research is your map in the quest for the perfect price.
It shows you what customers are willing to pay and how they perceive value.
You can use surveys, interviews, or focus groups to gather this vital data.
🎁 If you’re struggling to define your perfect customer. Check out our FREE Customer Clarity Kit. It’ll help you discover everything about your perfect customer, so you can target the right people with the right message.
The other way?
It’s something that I covered in detail in my LinkedIn carousel here, and it’s a great way to find the pricing gap in your market.
Harsh truth: This is mostly manual work, and there’s no way around it.
You cannot escape it.
You can, actually.
But then you’re gonna be the one paying the price.
Here’s a great example:
Dollar Shave Club disrupted the razor industry by using market research to uncover a key insight: customers were tired of overpriced razors.
(Even the founders were frustrated with the high cost of razors!)
They positioned themselves as a budget-friendly, yet high-quality option, hitting a sweet spot that propelled them to success.
🧪 Testing Prices
Price testing is a critical tool in your pricing strategy.
You can test different price points through methods like A/B testing.
Basically, you offer the same product at different prices to different segments of your audience and measure the results.
The data you gather can illuminate the path to your ideal pricing strategy.
🤏 Finding Your Pricing Sweet Spot
Now, how do you apply this to your business?
Here’s a simplified guide:
- Conduct market research to understand what your customers value and what they’re willing to pay.
- Based on your findings, set different price points for your product or service.
- Test these prices with a segment of your audience.
- Analyze the results: which price maximized customer perception of value and your profitability?
- That’s your pricing sweet spot!
Finding your brand’s pricing sweet spot might seem like a daunting task, but it’s worth every effort.
As I said… it’s a fine balance between delivering value to your customers and maintaining profitability.
But once you find it?
Your brand, just like Goldilocks, will know it’s “just right.”
Go on now… Get to work!!
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