HomeLesson LearnedLesson 7: Pricing Is Not About Costs And Profit, It Is The Single Biggest Brand Message About The Value Offered To Potential Consumers So Don’t Give It Away.

Lesson 7: Pricing Is Not About Costs And Profit, It Is The Single Biggest Brand Message About The Value Offered To Potential Consumers So Don’t Give It Away.


“Free” is a death sentence, the discount is the move of a dying brand.

Ever heard the phrase “discounted to death”? If not type it in BIG letters, print and post above your desk. It is the single scariest thing in advertising/marketing/promotion. The easiest tactic when you have a sales shortfall, market share is dropping, retailers are giving you a hard time is to jump to the conclusion that you must move stock faster and do that you had better cut the price.

If you are a marketer then that is the obvious reaction of someone not good at their job. Pricing strategy is after all the first and most important role of the marketer. That is right. Not briefing social media activity or reviewing advertising. First comes pricing. A marketer’s role is driven by the thought that they are here to “understand what the potential consumer wants, fears, needs, desires most and how our brand can help them achieve what they want” then making it available at the right price is the summary and first step of all other activities.

Drop the price, discount it, or worse still give something for free and you are basically saying “ I suck at my job … please fire me for incompetence”.

I was reminded of the perils of “free” in a great story that ethnographer par excellence Siamack Salari shared recently on a Linkedin post.

I had been at JWT for three weeks when a senior planner caught me in the corridor. “Do you think we’d learn anything from watching people buying newspapers next Monday morning?” “Why?” “Microsoft is paying for 1.5 million issues of the Times – double the usual daily circulation. So they can give it away for free. And the Telegraph (our client) is a little concerned”. On Monday morning I was standing in a newsagent. The first person who picked up the Times walked to the counter to pay. Newsagent: “It’s free today!” Customer: “Oh! I’ll buy another paper then. And so he did. With the coins, he still had in his hand. The second, third and fourth customer did the same. In twenty minutes I could see the Times had shot themselves in the foot. Because people were sampling other papers. Because the Times was unexpectedly free. Because the Times had not thought their promotion through. At 9 am I called the office and a loud cheer erupted when I told them what I had seen. “But wait, this is just one newsagent…” “Siamack, your job is done. Come in please.” The Telegraph published a headline gloating about the Times’ big boo-boo. A month later circulation figures vindicated me.

“Free” after all really means “worthless” to most of us today. We pay a “premium” because something seems worth more than we first thought or because we understand it to have an advantage hidden to those who “don’t really understand”. A brand suddenly reduced in price ( 2 for 1, buy now and get a big discount, short time only sales etc) may make us react but never build real interest, desire or loyalty.

Instead of “free” or “cheap” always think VALUE. What can you do, show, share, offer for the same price that will add more value to your brand? Maybe explain extra features, combine it with added experiences through partner promotions, added apps available only to buyers, more service. These are the things that make a brand “worth” more at your desired price and at the same time build value and gain interest that lasts.

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