Whenever we buy or avail of our go-to products from our favourite store or service provider, we would always want to get our money’s worth—‘ika nga, dapat ay laging sulit. Pricing really dictates ‘add to cart’ and impulsive buying behaviour of every Filipino which justifies that consumers are really price sensitive.
In the Philippines, the price of the product is not just a basic decision that a business has to make—it is more of a strategy which should be a balance between ‘what consumers can pay and what they think is fair’.
Not always, customers are price sensitive. On many occasions, how the business sets price for their products talks about the product that it sells. I can still recall one of my ‘gasgas’ selling lines when I was a salesperson for a TV set in a mall— ‘the price speaks for its quality’. And I have been a very effective salesman when I tell my customers this line. This is true more especially to customers who have higher purchasing power. If the price is too low, they might think that the product is substandard. And conversely, if it is too high, and they’ll scroll past you faster than a TikTok ad.
Balancing between price and quality is truly imperative for businesses. Successful brands have already mastered this strategy. For example, Jollibee doesn’t have to be the cheapest to win hearts — because for them, they are not just selling chicken, they sell ‘joy’.
Starbucks can have long queues in their stores despite of their high price points for coffee and pastries because according to them, they don’t sell coffee, they sell experience. Lastly, Apple, amidst tough competition among smartphone brands, is complacent with its skyrocketing prices for their flagship devices because they believe that ‘they are the gold standard in smartphones’.
True enough, cost-price pricing is a business’ friend since it ensures that the business won’t incur losses by summing their expenses first and adding a profit margin of their lliking. That’s a simple math to be done but in this hyper-competitive world, they must be more creative to give their business an extra life. As consumers nowadays are smarter and the market shifts faster, a less creative pricing strategy can be as bad as killing a business at an instant.
More entrepreneurs and business owners are using one of the most effective, justifiable and profit-driving business models—the value-based pricing strategy. This entails businesses to set the price of products based on the perceived value or worth of the products in the eyes of the consumers. This strategy works hand in hand with branding and positive brand image. If you might have noticed, business which positions their products as being premium or top of the line can command or dictate higher prices than their competitors.
Meanwhile, for digital businesses, pricing strategies could be a little bit different. Digital consumers have been lured and ‘seduced’ by the freemium models of businesses that offers streaming service or even productivity tools and apps. Freemium pricing strategy is where basic features and services are given free to users and requires them to pay for upgraded features and services.
But what about “penetration pricing” which we love the most— that move of starting cheap to attract customer attention? Businesses should be very cautious in using this strategy as this can be a double-edged sword. Matter of fact is, it easy to gain customers through low prices at the beginning, but it’s harder to sustain their oyalty once prices climb.
In Philippine business, pricing is not about who can go lowest — it’s about who can understand the customer best. The future belongs to those who mix analytics with empathy, data with ‘diskarte’. Because at the end of the day, the best pricing strategy is one that makes your customers say, “Sulit ‘to.” #
