What should the price of my brand be? Three hacks to get it right
If your current price structure doesn’t balance winning on demand, revenue and margin, then it’s not your optimal one. Find out how to reset it here.
We have two contrasting thoughts in our minds: I believe people have now less spending power, whereas Graham believes people are willing to pay double for some brands. The truth is that we both make valid points that are backed up with evidence. Kantar Sightlines data shows that nearly half of US shoppers have 20% or less of their income left as discretionary and that private labels have gained ground with inflation. On the other hand, a deep dive into the virtues of Pricing Power – a metric from Kantar’s validated Meaningful, Different and Salient framework that represents a brand’s equity in the consumer mind – reveals that shoppers are apt to pay two times more for brands with high Pricing Power vs brands without.
Both data sets describe consumer realities, often even for the same person. Despite belt tightening, a seemingly irrational preference for some products and services remains. Even bargain hunters step out of their shopping comfort zone to pay 14% more for brands they single out as meaningfully different. But, for all of this to happen, you first need to set the right price.
If you’ve read the first chapter of our pricing trilogy, you are hopefully convinced Pricing Power is a real thing and, that as a marketer, you are able to affect consumer sensitivity to price changes. Your pricing technique is not simplistically cost-based: cost of manufacture – markup – selling price. You aspire to understand your category shoppers to work out the value you are offering customers. You are determined not to leave money on the table and you are on track to harvest the perceived value of your product or service with the optimal price. What do you do next?
Here are the three research hacks to follow to get it right and the one constant truth to activate it.