On his way to attend the Professional Pricing Society meeting in Las Vegas, Mark Stiving picked up some "principles of pricing" from a hooker who struck up a conversation with him as he walked to his hotel. No, it's not what you think. Stiving boldly decided to ask the woman a few questions about her business and found out how much she knew about price optimization and value-based pricing. So if you need any more evidence that pricing segmentation is a good thing, says Mark, you need look no further than this video:
In the video, How to Price: Lessons from a Hooker, Mark tells how he met a nice-looking woman on the street as he was walking to his hotel. Mark talks to her and gets a wonderful lesson in dynamic retail pricing optimization:
"So what do you do?" he asks a woman who is walking in the same direction as he is.
"Anything you want," she answers.
That's when Mark realizes what kind of work she does.
The next thing Mark blurts out:
"I'm a pricing expert, can I ask you some questions?"
"Yes," she answers.
1. What do you charge?
Do you ever take less?
No, but I have names of friends who will accept less.
Pricing Lesson #1. Know your value.
2. Do you ever charge more?
Yes, if they appear to be well-to-do, I start at $800.
Pricing Lesson #2. Segment your pricing
3. (During Mark's "interview," she takes a phone call and asks the client if they want her and a friend to come over).
"What do you charge for this?" Mark asks.
"$2000", she answers.
Pricing Lesson #3: Have a product portfolio
Final Question: "How much did you make last year?"
"I worked almost every day and I made over a million dollars," she answers.
Final Lesson from Mark:
If you want to be a millionaire, learn these three pricing lessons:
#1. Know your value.
#2. Segment your pricing.
#3: Have a product portfolio
Bottom Line For Your Bottom Line:
The takeaway here, according to Mark (or was it Matthew Balfour?) is to remember that pricing shouldn’t always stop with the single price. Try and think of ways that pricing segmentation could be used to maximize your sales and profits. Learn more at MarkStiving.com