The Marketplace Is Speaking …
You must just be covering your ears and going, “la la la la!”
Some things are mysterious and difficult to solve. Watson and Crick had to bust their extremely intelligent humps to figure out what DNA looked like. Finding the Unabomber was a multi-decade puzzle for law enforcement. Just finding Waldo is tough for me.
Other things … they just aren’t that hard. But they can feel that way if you’re not willing to accept the information that you have.
Pricing certainly can be complicated, and getting pricing just right is a hell of a puzzle. Avoiding getting it totally wrong, however, is not nearly as hard.
Let’s talk about the first reality of pricing: You, the supplier, don’t get to decide what people want to pay for your product. You get to set the price, but you don’t get to set the value. You may wish to sell your ticket for $X, but the customer decides whether or not it’s worth that price. If they don’t buy it when given the opportunity, the marketplace has told you something important that you need to pay attention to.
Namely, that your ticket is worth a different price from the one you thought.
If, as in this example, you’re neither selling tickets at the price you set nor able to give them away, you’re actually getting two different messages. The first message — that you can’t give them away successfully — tells you that the product is not compelling. Remember that a free ticket isn’t free, but dropping the cash price all the way to zero should drive unit “sales,” if nothing else. Forget about how it’s perceived for the moment, and focus on the fact that it should drive unit sales. If it doesn’t even really do that well, you’ve got a clear product problem, and that’s exactly what the market is telling you.
The second problem is equally important, but different. If you can’t sell many units at the price you’re asking AND you insist on maintaining that price knowing that your unit sales are going to crater, the market is telling you something else. Namely, you have priced your tickets too high. You’re not optimizing revenue at those prices, and you’re not optimizing audience size. You’re way better off adjusting price to optimize (and sell out) than wishing that people wanted to pay more.
If you find yourself saying, “We’re maintaining our prices, but we know this means we’re going to play in front of an empty stadium,” you’re not listening to the marketplace.
One day, you want to sell those tickets for more money. That’s a great goal. The way to do that is not to pretend they’re worth the price you want today and cover the top deck with a tarp. The way to do that (besides improving the product, which is critical) is to set the right price for today, sell the building out to the rafters today, and as demand and interest build walk those prices up as the market allows.
Here’s another little secret: Unless the product becomes way, way more interesting to people all of a sudden, what I just described is pretty much the only way to do it. Pretendinitis doesn’t work. Faking it ’til you make it doesn’t work in a transparent market era. What works is real value development in the product and marketing and good pricing management.
Fortunately, you’ve got the help of the marketplace kindly guiding you to the right answer.