Picking the Right Price

This week I read a comment about how expensive the toll is for the Verrazano-Narrows Bridge bridge in New York ($17).  Of course the comment went on to associate that price to things like giving away gold or some type of perfect world on the other end of the bridge.  Of course there’s no gold at the end of the bridge or perfection, but some would tell you that they’re willing to pay the price so they get to places they love very much.

But it got me thinking about how we price things as business owners and the challenge that sometimes comes with trying to cover costs.  I’m sure that someone did the math and determined that in order to pay off work and upkeep that was/is done on the bridge before a new bridge is needed, $17 was the appropriate number per vehicle. In many cases businesses can choose to spread the costs between multiple comparable products, but sometimes there’s no other options to combine costs with, and sometimes you want to have that premium cost.

In this case I feel like they could have combined or spread the costs around a little better. There are lots of other bridges in NY that could have a dollar or two added to the cost which would help bring the cost for crossing this bridge down a bit. But at the same time you may not necessarily want to make an even cost for every bridge in NY because some people don’t ever cross the Verrazano-Narrows Bridge bridge and don’t want to pay for the cost of someone else crossing it. It’s also not reasonable to have an even cost for products or services you offer if you’ve got something that’s truly custom or unique and deserves the higher price. A $5 toy shouldn’t cost the same as your $45 customized toy just so you can have all $45 items.

Price is something that customers consider when buying products and services, and price should be something you consider so that you’re covered on expenses but don’t over pricing your products or services so much that people choose to shop with someone else on a regular basis. There will always be someone who thinks your price is ridiculous and that’s OK, they’re not your ideal customer. But if you’re going to charge a premium you had better have a really good reason for the price you’ve chosen.

What are your thoughts on pricing products and services?

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