Acronym

Rafi Mohammed wrote the book on pricing--literally, The Art of Pricing. His two main points are to price in terms of value to the customer and to give options for different value levels. As he spoke yesterday, he used the example of the city-to-city bus lines that run along the East Coast. For a little less than a thousand bucks, you get luxury seats, a full bar, and all the bells and whistles. For $25 or so, you can go from DC to New York City in a crowded, no frills ride that ranks in the bottom five percent of mass transportation safety.

Mohammed's point was that the bus line pricing options are not good or bad, they're priced for the value they provide. Here's where my mind wanders to one of my favorite topics: focus. I've talked about it plenty on Acronym, here's an example, and another. A lot of associations try to be all over the spectrum. In effect, they try to be the cheapo line and the luxury line. An organization trying to be both is just asking for disaster. This might fly in the face of Mohammed's options idea, but I don't think that's exactly what he had in mind. Think more like a premium than an option; a luxury service may differentiate itself (and Mohammed would add charge me) to pick you up at our door rather than a centralized location. To me there's an important nexus of pricing and focus: know your niche, and price and serve accordingly, no apologies for what you're not.

Another quick thought, most organizations aren't on the luxury side or the cheapo side. We're stuck in the messy middle. I think a good thought exercise for groups would be to explore the bus line question: if we aspired to be the cheapo line, that's where we can do the most good and grow the largest business, what would the organization look like? Now contrast that with the opposite: What would be different about your organization if your only focus was luxury and being the primo offering in the market.