We want to continue to provide you with insight and guidance on Pricing. For this month’s column, we spoke with Doug Gober again as he answers more popular pricing questions. Continue reading below as we provide information on competitor pricing and package pricing!
Question: Should I match my competitors’ prices?
Doug Gober: The critical element of pricing should be how you want to be seen in the marketplace. Because the market is so segmented, it is challenging for a funeral home to be all things to all people. It would be beneficial to define who you want to be in the marketplace rather than who and how your competitors are.
This idea of determining your position is certainly more important than seeing what your competitors in the market are doing. In some cases, you may not be at the same level as your competitors and that is fine. One of your competitors can be going after the lower value market and that for instance is not one of your goals.
You cannot ignore what is going on around you, but what you can do is only control how you want your business to function in that market. The mid-priced market funeral home is where the real opportunity is. There are a lot of legacy firms out there and there are a lot of low-priced firms. Both of whom would be considered your competitors.
If you are going for that “sweet spot” or the middle of the road, as long as you know your pricing offer fits somewhere in between the top-tier legacy brand and the low-end bottom feeder, then you are probably accomplishing your pricing objective simply to be in between those two.
Inherent with your pricing however needs to be equivalent value. Regardless of the price point you choose, you need to consider these thoughts from the consumer, “Am I getting from you what I am paying for at that price point?” and “Do I perceive your pricing as value for the money spent?” One last thing to consider, are you absolutely certain that you are pricing, based on your cost, to show a profit.
Question: Should I be offering package pricing? Why?
Doug Gober: In the open marketplace, package pricing is very common. We all walk in to fast-food restaurants and choose meal combo #3. We also will go to high-end car dealerships and have various features and enhancements packaged together. However, rarely do you see service and merchandise packages in the open marketplace combined. There is no doubt that packaging can make it easier for the consumer to choose. The challenge here is that every funeral is crafted as being a one-off. We want each and every encounter with a family to be unique. And so, packaging becomes difficult with the need for uniqueness for each family.
However, we are one of the few businesses where merchandise is less important than our service offer. If you go into an Aveda Spa, you will walk through levels of products before you eventually reach the services area. This is known as sequential disclosure—we have products available in one location and the services in other. This retail practice has been used many times with the idea of separating product from service. In some cases, these same products were what was used in the service area in the effort to now make the consumers want to buy them to continue to use post-service.
The opportunity to define funeral service with a skilled arranger is the most important function that we as a business have to offer. Once that event has been defined, then the client should have the opportunity to select from an array of merchandise that gives them multiple options for every product necessary to fulfill their service wishes. Packaging in funeral services has been tried with varying degrees of success. Before implementing packages, it is very important to have a good understanding of the expected results. We at The Foresight Companies can help.
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