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Can Pricing Strategy Affect Your Brand

Written by: Mark Smiciklas

Article Overview: Can your pricing strategy affect how your clients perceive your small business brand? I read an article yesterday about soaring fuel costs in the travel sector and how Canada's much maligned national airline (Air Canada) will be implementing a series of fees to recoup costs. The problem with this type of pricing strategy is the effect it has on your ability to build brand equity.

Can Pricing Strategy Affect Your Brand

Can your pricing strategy affect how your clients perceive your small business brand? I read an article yesterday about soaring fuel costs in the travel sector and how Canada's much maligned national airline (Air Canada) will be implementing a series of fees to recoup costs. Here are a couple of my favorites:

* $25.00 fee to check a second bag (regardless of weight).
* $15.00-$20.00 fee to select your seat in advance.
* $25.00 fee to book your flight by phone instead of online.

The problem with this type of pricing strategy is the effect it has on your ability to build brand equity. In the article, Joseph D'Cruz, a professor of strategic management at the University of Toronto, questions Air Canada's strategy. "They're trying to squeeze every last cent of revenue out of the customer. Are they sacrificing customer goodwill by nickel-and-diming the passenger...my sense is that they are probably doing so."

Think Like a Consumer.

A good practice to embrace during the development/review of pricing strategies is to think and feel like a consumer. A client of mine recently used "price empathy" during a review to determine whether or not to implement a minimum fee for a "pay as you go" service. The group put themselves in their customers shoes and realized they were better off removing the minimum fee - The decision was based on how each employee would feel if they were presented with their own pricing policy. The decision has proven to be a good one - the service has taken off due to no minimum payments.

"Price Does Not Include Batteries".

We're all familiar with the disclaimer "price does not include..." Not including certain features, services, options, etc. make sense with some types of products. However, I would urge your small business to be cautious with respect to "a la carte" pricing. If consumers have an expectation that your product or service should include something, then charging for it on top of the base price will likely cause friction. For example, it would be logical for consumers to assume the price of an airline ticket would include the ability to book flights by phone or reserve seats in advance.

I wonder if executives at Air Canada thought about how customers might feel when they get charged for "basic" services on top of the original price of their ticket. An apparent lack of price empathy will not help your brand - it can only strain relationships with your customers and serve to erode any goodwill or equity your company has developed.

Offer Good Value.

Many businesses succumb to the pressure of trying to compete on price and then attempt to regain margin by adding fees. Would it not be better to charge a slightly higher price and include a few extra features/services? Give some thought to the effects of pricing policies on your brand. Offering good value will help your small business build a positive image, develop goodwill with your customers and, over time, build brand equity.

Related Articles
  The Power of a Brand Name and how to make your own brand powerful
  Differentiating Pricing Strategy From Selling Strategy
  Controlling the Assumptions in Your Sales and Marketing Strategy
  Pricing Your Products and Services for Ultimate Growth
  Your Brand is More than a Logo or a Tagline

Article Tags: air canada, base price, batteries, brand equity, consumers, customer goodwill, empathy, expectation, friction, fuel costs, minimum payments, national airline, nickel, pricing strategies, pricing strategy, shoes, small business, strategic management, travel sector



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