Pricing Products and Services – Or How to Price for Fat People!

When you start a business, initially there’s a lot of flexibility in pricing, its the advantage a small business has, they can customise their services, to suit the client and therefore price their fee accordingly.
There comes a point where the service you offer leads to a natural process to become more standardised, for a number of reasons:1. You gain a clientele that can be analysed and classified, and a more standardised service can be offered.
2. You employ staff. Initially all pricing is done by the principle of the business, but there comes a point where you want staff to deal with prospective clients, and be able to quote a fee, the only way to do this is to have a standardised fee for services.
3. The initial customisation that you can offer, once you grow to a certain level, becomes a constraint on growth and profitability of your business, as customisation adds costs. Standardisation should streamline processes and services and lead to greater efficiency and profitability.
4. You can offer differing levels of service according to what clients are willing to pay. Accountants commonly offer a Gold, Silver and Bronze.
For example if a restaurant only offers three types of red wine at three different price points its likely to sell more then if they only offered one. The idea being that a large percentage will chose the middle option as they don’t want to be seen as a cheap skate, but don’t want to pay the for the highest price one, the middle is the compromise choice between quality and price-its probably the one that makes the restaurant the greatest margin as well!
Hang on a minute, I hear you say, what’s the title about fat people got to do this? Well how about applying pricing principles to clothes?
In theory why should a garment that is XL be priced the same as XS, the smaller one uses less material, probably is quicker to make, takes less packaging, and maybe storage.
You could therefore argue that fat people should have to pay more for their clothes.
Obviously its controversial, but you can see the logic behind it, and if used cleverly could be marketed as an incentive to lose weight.
Think about how you price your products or services, and the levels of service you could offer, to maximise sales.
Could you apply theses principles to your business?