Pricing Strategy: It’s All About the Perception of Quality

Recently I hired a freelance web designer to create an original Twitter page to add to my blog site. I literally had a world of choices—from on-line service providers—that hail from all corners of the planet.

Since launching my writing career/publishing company, I have hired many types of professionals: book designers, illustrators, printers, proofreaders, marketing “experts” [don’t waste your time…that’s another blog…] copy editors, website designers, animators, blog installers, blog managers, virtual assistants, and others.

My first criteria: Hire American. I especially eschew China (where I could get better printing prices) and Iran (where I could get stoned).

Second, when in doubt, I hire a woman. I have nothing against hiring a qualified man. But women have a harder row to hoe in the business world, so I give them a break.

Then I try to intuit the intangible qualities: honesty, reliability, and like-mindedness. I try to hire someone who I think is compatible with my personality and would be fun to work with.

Lastly, I consider price. I have never been able to afford “top of the line” providers. I usually go for the middle tier in the costing structure. But for this latest project, I went with cheap. I had asked my usual design person for an estimate, which she gave me, and which sounded reasonable. But there were two problems: she was booked for a month and her turnaround time was an additional one to two weeks.

So I decided to go cheap with a two to three day turnaround by a web designer who bid one-third the cost of my usual person. I figured if it was a mess, I wasn’t really out that much money. If it turned out well, I had saved both time and money.

I’m happy to report I’m pleased with the results of the “cheap” provider, who also happens to be a nice woman from America. (See below)

But I had a problem with her pricing. It was too low. That bugged me. Businesswomen should NOT sell themselves short just because they’re competing against men (or anyone else). Too many businesswomen think that what they have to offer is not as valuable as what a man does. I say BALONEY! Even though we all know that our society values men over women. To change this: Women must be stand up for themselves.

Therefore, I felt compelled to meddle in my “cheap” provider’s business operations and offer my advice. Here’s the email I sent her. (The name has been changed to protect the innocent!)

Hi Esmerelda,

 

I have not heard back from my blog manager about the technical specs. He’s a ‘wild and crazy guy’ from L.A.—checks in with me whenever. He’s really knows his stuff so I don’t mind.

 

Here’s an unsolicited comment and don’t feel obligated to respond — since it’s none of my business! 😉

BUT…if I were you, I would RAISE my hourly rate to $___.

 

Here’s why: It’s not an outrageous amount, and in fact, it’s still on the low side. The providers on _____ from the foreign countries charge low rates—but you shouldn’t try to compete with them on pricing. You don’t live in India!

 

There are plenty of people—like me—who ONLY use American vendors — because I’m partial to the American economy — not any other country — no matter how much I would save. It’s just a matter of principle. When you use an American worker, you EXPECT to pay more.

 

But more important, PRICE is a perceived indicator of QUALITY. People associate a higher price as something that must be better. For instance, why does a Cadillac cost more than a Honda? Because it’s a “better” car.

 

Similarly, why does one hairdresser charge $50 for a haircut and another charges $100? It’s still a haircut. Is one hairdresser really twice as good as the other? Yes, to the person who perceives that the $100 haircut is worth it.

 

Providers that underprice themselves run the risk of being perceived as not as capable as those who charge a higher price. It’s a psychological game: why does this person charge so much? He/She must be really good!Must not be that good. Likewise, why does a person charge a low price? The thinking is:

 

There is also the thinking: You get what you pay for. If a vendor charges a low price, people EXPECT not to get too much in return.

 

Therefore, I think bumping your rate to $___ would not hurt your business and might actually help get more work. You don’t have to price yourself as what is the going rate in an office in your area. That doesn’t apply. You’re competing on the internet with providers from across the U.S.

 

I normally use vendors from California, who charge at the higher end of the scale. The reason I use CA people is that I think they are ‘more cutting edge,’ which I consider “better.” That may or may not be true. But that is my perception.

 

You need to think, “Hey, I’m good and I’m worth it.” And mean it. And charge accordingly.

 

I’ll let you know if I hear back regarding my “Dear Crabby” advice.

 

Custom Twitter page for FuchsiaWoman.com. Now all I need to do is learn how to Twitter!

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