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Post for August 10, 2021
*** Before beginning this post, which contains specific advice, we first must state the legal disclaimer that all advice provided on the JustShopBy™ Blog is provided without warranty and that we are not responsible for the outcome of you applying any such advice to your Business. It is your responsibility to determine whether our advice is relevant to your specific situation and you are responsible for the outcome(s) of applying any advice provided on the JustShopBy™ Blog.
So... Revisiting our post from yesterday, if Price Transparency is the problem facing local Shops, then what is the solution?
Price Differentiation!!!
Simply put, you must find ways to charge different Customers different prices based on 1) their Willingness-To-Pay (WTP) and 2) their Ability-To-Pay (ABT). And if you chose to do this, you must do so both FAIRLY and TRANSPARENTLY!
If you are interested, we offer patent-pending technology that empowers businesses to do just this. But before addressing that technology, let us consider the simplest path to accomplish the task.
How can I charge different Customers different prices?
Simply put... You write your highest price on the price tag for a product, but make it clear that prices are negotiable. For example, you could display a huge sign in your Shop that says "If you want to pay less, ask about our Price Negotiation Policy".
Does this sound familiar? This is essentially the sales policy used by Car Dealerships for the last century.
Still you might ask:
Won't it turn Customers away if I set higher prices than internet competitors?
In this post, we assume your Shop does not have an internet presence anyway. Furthermore, such Shops are often independently owned and managed, so these Shops have tremendous flexibility on pricing policy.
In this scenario, once the Customer enters your Shop, they have indicated that they desire to purchase from you specifically, so this is your chance to determine how much above internet prices they are Willing-To-Pay (as well as how much they can afford to pay).
Once you have determined this information, your goals should be 1) that the Customer leaves satisfied and 2) that you make a profitable sale.
To this end, it is important that you identify the minimum price at which you are willing to sell each product. In the future, we will refer to the gap between your stated price and this minimum price as the JustShopBy Barter Zone™ (or the Barter Zone™).
JustShopBy Barter Zone™ = (Price on Tag or Sign - Minimum Price at which Shop will Sell Product)
And your next question might be:
How do I determine how much of the JustShopBy Barter Zone™ to give up as a discount to a specific Customer?
This topic will be the subject of our next post, but our recommendation is to customize discounts based on what the Customer is willing to do to help the Shop in exchange for the discount, thus using the discount to offset the Shop’s costs elsewhere (i.e. marketing, research, liability insurance, etc.).
We will share more on this topic tomorrow...