Value Based Pricing
Part 1
Brad Simon
Do you remember the song How Much Is that Doggie in the Window that we sang way back in our childhood?
How much is that doggie in the window?
The one with the waggley tail.
How much is that doggie in the window?
Oh I do hope that doggie for sale.
Ever since retail began people have wondered how to price their products and services. Pricing decisions are perhaps the single largest determining factor as to whether a company makes a profit or not and how much of a profit it will make. If you set your prices too low, you will end up with a loss. If you set your prices too high, customers will go elsewhere to purchase the product.
Services, such as jewelry repair, can be even more difficult to price than products. Services are non-tangible; you cannot touch or hold them. You can see, hold, and feel a ring but you cannot see, hold, or feel a ring sizing. This creates pricing difficulties, as you do not have tangible things like stones or metal to base a price on. Rather than being able to see advantages such as the number or size of stones customers have to depend on such ambiguous characteristics as reputation or image of the person providing the service.
Services are also non-transferable. A ring sizing cannot be returned. You cannot transfer a ring sizing to another ring, nor give it away or hand it down to another person. Services are also non-storable. You cannot stock up on ring sizings during the slower summer months and have them available for the rush during the Christmas season.
In addition, with the services you perform you do not have a manufacturer’s cost or suggested retail price to work with, as you do with the jewelry and watch products in our stores. This all leads to problems when we try to set prices for our jewelry repair services.