'Tis the season for insane pricing strategies
I wonder whether I’ll ever cease to be amazed at the pricing strategies companies employ. Here's an example from our local grocery chain.
It’s the 2013 holiday season. I’m walking down the aisle when I spot AA batteries on sale at a whopping 30 percent off.
It’s the HOLIDAY SEASON! Kids are going to be getting toys and games that require batteries. Why in the world would you put batteries on sale when the demand is higher than at any other time of the year?
Grocery stores are also notorious for putting turkeys and all the fixin's on sale at Thanksgiving. Discounts on oatmeal arrive with the first cold snap. Liquor, an oft-enjoyed holiday gift, goes on sale just in time for the holidays.
Of course, this phenomenon isn’t limited to grocery stores. Carpet-cleaning companies offer discounts in the spring when they have trouble keeping up with demand. Department stores tout huge sales on clothing for the upcoming season.
The presumption is that these discounts will draw more people into the store and the store will make its money on the other purchases the customer makes. In the words of Dr. Phil, “How’s that working for ya’?”
What these sellers are ignoring is the value of convenience. How much time do people really have to chase down all the "savings" these sales generate? You don’t have to trust me on this, just think about how many times you’ve said “It’s cheaper at ... , but I’m not going to make an extra trip just for that.”
Implicit in that statement is the indication that you’ll take advantage of a sale if you are going to be there for some other purpose. In other words, the trade off between the value of your time and the amount of savings isn’t great enough to lure you into the store.
When we, as sellers, understand how to calculate the value people place on their time we’ll stop giving away revenues, profits and cash flow during periods of peak demand.
(Photo by Paul Swansen.)
Dale Furtwengler Dale Furtwengler is a professional speaker, author and business consultant. His latest book, "Pricing for Profit," is dedicated to helping organizations break the bonds of industry pricing. www