Selling cheap is easy, but not very profitable. Needless to remind you of that joke about the dollar that cost eighty cents.
Selling expensive is much more difficult, but much more profitable.
Easy selling at high prices is a pie in the sky of any entrepreneur.
Dreams are made to be attainable otherwise it isn’t quite a dream.
However, the Humanless approach enables us to come closer to some of such pipedream. Perhaps only a few steps closer. But each of these steps is worth its weight in gold. We have already told you about some before.
Every single business can divide its customers into two groups according to their price sensitivity: highly- and lowly sensitive.
It is clear, that the figure may vary greatly for a certain company: somewhere two percent is far too much, but there are cases when 300% difference in price is not that crucial for the choice of the supplier.
Nevertheless, in 99% of cases these two groups of customers can be clearly identified.
The relative size of these two groups can also be very different. It is obvious that one pricing strategy is well reasoned (rationality is estimated in terms of generating the maximum profit in the medium and long term period) if 90% of the customers are not too price-sensitive, and the opposite one suites if they are not.
Once the internet is a critically important sales and promotion tool the choice of pricing strategy has another important issue to keep in mind.
In the era of Web2.0 the ability or desire of the customer to influence the public image of your company is as important as his purchasing power.Very often the customer who doesn’t buy a thing will trash your company. For some unknown reason the ones who are extremely particular about the price (due to poverty or greed) are hyperactive on the Internet — forums, reviews, ratings etc.
Thus, even if price-sensitive ones make only 10% of your customers , these usually are the most active 10%, so you can not just ignore them.
Here is how this conflict is settled (or at least mitigated) with help of dia$par in the example of Ulmart.
On-line service "My price":
The idea is as following: customers who demand low price, fill in an on-line form and additionally specify the details of the competing offer.
The information is automatically validated by dia$par (the validation criteria are commercial secrets), and it reserves the goods at the lowered price for that customer.
Note: It is only the customer who submits the form who gets the special offer. The price on the Price-list (and, accordingly, Total gross profit for the item), does not change.
The described process is repeated in Ulmart several thousand times a month -with absolutely no effort on the staff side. Everything runs in the background mode (the relevant commodity manager has the right to interfere with the process — but such cases almost never occur).
Here it is — the conveyor of personal approach.
?In addition to that very cake.
So what about your price sensitivity?