Identifying your pricing strategy is a business element that purists will say is more operations than marketing, but I have to tell you, they are wrong. Pricing is all about marketing. It is about perception. It’s part of the customer experience.
Let me give you a concrete example. But first, a confession.
I am annoyed. I’m actually beyond annoyed. I am ticked. And feeling taken advantage of. If you ever have a client express those feelings about your prices, heed the warning. Bad things happen when you have a customer feeling that way. This is what the Word of Mouth Marketing Association (WOMMA) will tell you is called bad buzz. Watch it in action.
I’ve had a business relationship with an Iowa based bank, Bankers Trust, for several years. For the past few years, I had a letter of credit with them. I paid an annual fee of around $300. I no longer need the letter of credit. The annual renewal is January 1st, so I wanted to cancel it before I incurred the annual fee. I got the cancellation confirmation letter today. With a bill for $115! When I e-mailed them to inquire why I was paying a fee, since I was specifically closing it to avoid the fee – they said:
“To cancel the letter of credit requires action on our part. We charge the final fee of $115.00 to cover the cost of issuing the letter, updating our records, following up on retrieving the original after it matures and the cost of the courier fee. “
I’m stuck. I have no need for the product. There is no “early cancellation penalty” and yet, even though I paid for the privilege of having the letter of credit, now I am paying for the privilege of NOT having it?
Ridiculous. And demonstrating a complete lack of customer awareness. Their pricing strategy is about them, not me. And they have lost a customer over it. Worse for them…they have aggravated a blogger, community volunteer, and business owner who is going to tell this story over and over.
The dumb part of this is that it’s an easy fix. No customer is going to be happy about being double-dipped. So why not build the cancellation fee into the first year’s annual cost of having the letter of credit? Call it initial/closing administrative costs and be done with it.
As with most things, it’s not what you say/do, it’s how you say or do that has impact.
Read more about how pricing = marketing at BizMord Search and Marketing Blog. And weigh in on this: What inadvertent impact might your pricing have on clients?