Not too long ago, I came across a fantastic article on menu pricing in New York Magazine. I had no idea so much went into it. I’ve integrated some of the ideas (I’ll be sure to report back) into my current price sheet, and it got me to thinking about the the basics of pricing for weddings.
For many, pricing discussions are like religious wars. Every expert is sure their way is the best. But is there really a best? I’ve tried no-hassle pricing, a la carte pricing, two packages, three packages, four, and five. I’ve done pre-design with album credits, I’ve pre-sold albums, and I’ve gone without albums. You name it, there’s a good chance I’ve tried it. You know what? They all work, but here are two things I’ve learned. First, even though many systems can be effective, they do not work in the same way. Some systems work better if you can negotiate well, some work better if you can throw in lots of add-ons, and some work better based for higher end clients. It’s as important to know what you can offer and what you want, as it is to structure your pricing in the right way. Second, there are certain principles to think about with any pricing structure. If you just mix and match systems blindly, you can be asking for disaster, but if you mix and match well, it can help you find just the solution you need. Here are four considerations.
1. Contrast and balance
Anchoring is the effect whereby the first piece of information we hear sets the bar by which we measure other information. If you tell someone an album is $5,000 normally but now it’s only $3,000, suddenly $3,000 sounds pretty good. It doesn’t even matter if someone knows what you’re doing. It still feels the same. There’s a reason every infomercial uses this technique. It’s also why you’re supposed to have a high package that no one is supposed to buy. Think about those Bose sound systems people buy for their cars. After you just spent $20,000 on a car, what’s a few thousand more? But how many people would spend a few thousand extra on their car after they’ve gone home and gotten used to their car? And that’s why so many people have car stereos that are way more expensive than what they have at home.
For those with a la carte options, be careful about the balance of items. A couple years back, I once tried selling a combined packaged with $3,500 for the photography and $2,500 for the album. People weren’t to keen on that. It made the albums sound overpriced and the photography cheap. When I adjusted it to $4,000 for the photography and $2,000 for the album it sounded much better. No one ever asked about it.
2. Value is always a factor
People like getting more. That doesn’t mean you need to be cheap. It means that people like to feel like they’re getting the most out of their investment. Find a way to show people how much they’re getting. I remember I once signed up for a special New Year’s package for a party. It was a “Platinum” package that included unlimited champagne, hors d’oeuvres throughout the night, a special all-night pass to the outdoor area and VIP area, a post-midnight buffet, immediate entry, a VIP host, party favors, and so the list went. Yeah, I was a sucker. But it sure sounded a lot better than what it was, which was one waiter with champagne covering a crowded room with cold appetizers, and it also made the $75 extra sound so worth it. You figure the difference between $175 and $250 just isn’t that big, so why not throw in the extras? It gives a justification to spend more. You’ll notice how the balance also comes into play. If it were $125 and $250 or even $150 and $250, it would sound wholly different.
The first time I went on JetBlue, I remember they gave me free headphones. I don’t really remember if they’re still doing that. I can’t keep track of what airline charges for what nowadays. But at the time, they were free and most other airlines charged a buck or two to get the same. How do you think charging a dollar for headphones made them seem? Would anyone notice an extra dollar on the ticket price? The irony is that JetBlue was supposed to be the economy airline, but they not only won big points with me for service, but for value.
And I once had a couple with a $6,000 budget who wanted my $7,500 package. I offered to give them a $4,000 upgrade for $2,500, and they went for it. It was a classic win/win. They got a larger album and exactly what they wanted, and I had a sale for $8,500 instead of $6,000. Giving the perception of value is so potent that Amazon is able to successfully sell book bundles that don’t even offer any savings!
3. Who you are matters
This goes without saying, but the pricing you use should reflect the nature of your business, how much you charge, and how you relate to your clients. There is no one-size-fits-all pricing structure, because everyone runs their business differently. When I interviewed Jen Huang, she suggested that every package should be one that she wants her clients to buy. Even if she sold her base package to everyone, she would have enough to make what she needs. If you were to meet her, this would make complete sense. Her casual, warm demeanor and her incredible relationship with her clients completely fits her pricing strategy. It allows for an unusual level of openness and a relaxed sales process.
My wife is a trained graphic designer who does amazing work, and she works with me. This lowers my cost of production on albums and gives me more flexibility on anything involving design, so add-ons and album work bring in substantially higher profits for us. I offer a broader range of options, so if one couple spends five or six thousand, I know it will be offset by another who spends over ten thousand. I base my estimates on what the average of all sales will be.
4. Smaller payments give leverage
Separating payments into multiple parts makes a difference. Logically, of course, it’s all the same, but it’s not logic at work here. Four payments of $2,500 simply doesn’t feel as intimidating as two payments of $5,000. This comes in handy for clients on budgets (and keep in mind, a budget doesn’t always mean a low budget), especially when it’s a close call. It works not only because perceptually it feels smaller, but, also, because it gives people psychological wiggle room. Maybe they can’t afford it by the wedding date, but maybe they can pull it out of a future budget after the wedding. Maybe they’re expecting a bonus at the end of the year, and they don’t have the money now. Or, maybe they have the money, but there are cash flow issues. Even the perception of smaller quantities makes it feel more attainable. After all, doesn’t working out half an hour a day sound much easier than 182 hours? I just found out my storage space cost me $4,000 over the 10 years for stuff that isn’t even worth $4,000! If someone told me that in advance, I’d never have paid it. And, don’t forget it gives you an opportunity to extend the conversation if you want someone to sign-up, giving you leverage while negotiating.
5. Test, test, test
Big companies test their pricing strategies. You should too. You’ll never know what works for you with trying it, and if you only make an adjustment once a year, then you could easily go five years without acquiring enough information to make solid decisions about what’s effective. I’m not saying to charge people different amounts and change from one week to the next. But adjusting the structure and testing the presentation provides useful information. When I make adjustments, I make sure that two people within a close period will get the same basic value. I never want a client to be in a situation where they are at a substantial disadvantage, just because they came in one week instead instead of another (unless I’m truly increasing all of my prices). Word spreads fast and people talk, after all. But I do want to see how different structures play out and how they affect my meetings, so I test frequently. It’s the only real way to know.
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