20 I PSAI Association Insight, August 4, 2021
The Value of Proper Pricing
Todd Ginter, PSAI's Director of Marketing
When I was speaking with
our newsletter editor (that
would be PSAI Executive
Director Karleen Kos) about
topic ideas for this article,
she suggested I do a story
on pricing. I immediately
understood this would be a
very interesting and valuable
topic for PSAI members.
However, there was a
problem. I have never been
a business owner and never
had to price anything.
Does that mean I can't write an article
on pricing? No! It just means that I am
not able to bring my own insight and
expertise to the subject. Even if I was a
business owner at one time, I would not
be an expert on this many-faceted topic.
I thought, "Let's hear from some experts
or at least some qualified people on the
subject of pricing." It also occurred to me
to check the pricing-oriented research
that might be available and then provide
you with some of the best thinking out
there to give you some guidance on the
value of pricing.
So while this article is not going to give
you detailed and specific "how to" advice
on pricing, it can be good to hear what
other people have to say on the topic. I
have found six great pricing quotes and
investigated what insights can be drawn
from what these experts had to say.
If you would like to delve deeper into
pricing, I would recommend the book my
editor Karleen loaned to me called, The
Art of Pricing (How to Find the Hidden
Profits to Grow Your Business) by Rafi
Mohammed. You might recall that Mr.
Mohammed was a speaker at the PSAI's
2018 Annual Convention and Trade Show
in Portland, Oregon.
musical genius and an amazing performer.
But I saw this quote and thought her
opinion here was on point, following up
perfectly with Warren Buffett's sentiment
above. Pricing should be based on how
much value your customer finds in your
product. If your cost to produce it is
more than what someone will pay for it,
the laws of capitalism say you shouldn't
bother—and if you don't stop, you'll end
up bankrupt so you can't keep producing
it, even if you want to.
Your customer doesn't care about how
much (or in this case how little) you spent
in acquiring or maintaining your product.
Also, if you're offering a unique product,
you shouldn't price base on how much
your competitors are charging. Fergie
seems to find a lot of value in her Wet
N Wild 666 lip liner and would probably
pay a lot more than 99 cents for a tube.
That means it can be argued this lip liner
company is leaving money on the table
with its pricing strategy.
"The moment you make a
mistake in pricing, you're
eating into your reputation
or your profits."
— Katharine Paine
"Price is what you pay.
Value is what you get."
— Warren Buffett
I thought I would start with a quote from
financial wizard Warren Buffett who is a
pricing guru, even though he specializes
in pricing companies in the stock market
instead of pricing products. Still, his
pricing insights are very relevant to your
pricing strategy. His quote here is a great
reminder to look at your product from
your customer's perspective. Customers
will only buy your product if they believe
the value they're receiving is greater
than the price they're paying; otherwise,
why would they pay?
"For me, it's not about price.
It's about necessity, quality,
and usefulness. Like, I have
my Wet N Wild 666 lip liner.
It's 99 cents and always has
been. I started using it when
I was in high school, and it's
great."
— Fergie
You might not think of Fergie as a pricing
diva. She seems more obviously to be a
(continued on page 21)
