A fashion designer once lost the patronage of a wealthy man who stopped by to see what she got. He took a look around the shop, he liked what he saw but was turned off by the pricing. “I don’t wear cheap clothes!”
Picking pricing and target market for products and services remain ever tricky. Whichever pricing structure you choose, you are bound to alienate a considerable number of customers. Pricing is one of the factors that influences our perception of a product or service.
If it is expensive, we feel its premium, authentic, reliable, exclusive etc. Cheap on the other hand is common, mass, all-inclusive etc
To our fashion designer friend, what should she do? Raise her prices for the few rich patrons that stops by every now and then or maintain her prices to keep serving the everyday people.
I picked an advice from a Robert Kiyosaki book I read a few years ago. He advises that you never try to use a brand to reach both rich and poor customers at the same time.
Start 2 brands! That is his simple advice; one brand for your wealthy customers and another brand for the everyday people.
So, in this case… The fashion designer can create a new studio around where she can sell her clothes for 10x higher than the prices she listed at the first studio.
Wealthy people who don’t wear cheap clothes can buy for higher prices over there while others can continue buying at prices they can afford over here. 2 distinct brands from the same company. Everyone stays happy.
Interested in building innovative business ideas?
Since 2014, #TMP has been empowering people to learn, collaborate & build out innovative business ideas. #TMP is an online innovation hub.
Sign up today and get access to our private community of innovators.