Pedro Girardi uses insights gleaned from a recent trip to Uzbekistan to guide pricing strategies.
I recently spent two weeks in Uzbekistan. Before that trip, I knew very little about its economy. I had no concept of what prices were “normal.” At the beginning of the trip, I overpaid for meals, souvenirs, and guided tours. By the end of the trip, I was paying 25-75% less.
Let’s look at the example of guided tours and explore three main factors that drive pricing:
𝟭. 𝗩𝗮𝗹𝘂𝗲: I am a history geek who will likely never travel back to Uzbekistan. I was easily willing to spend over $100 on each guided tour.
𝟮. 𝗗𝗲𝗴𝗿𝗲𝗲 𝗼𝗳 𝗰𝗼𝗺𝗽𝗲𝘁𝗶𝘁𝗶𝗼𝗻 𝗮𝗰𝗿𝗼𝘀𝘀 𝘀𝗲𝗹𝗹𝗲𝗿𝘀: Very few Uzbek guides advertise online, resulting in low price transparency. If a customer can’t compare prices, you have room to increase prices while avoiding churn.
𝟯. 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿-𝘀𝗶𝗱𝗲 𝗶𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: The more customers know, the better they can negotiate prices down. At the beginning of the trip, when the first guide asked for $65, I was happy to take the deal. When the hotel in the third city offered me a guide for $75, I then knew that was too expensive. Browsing downtown, I found a competent guide for only $50.
In my experience, senior leaders are too afraid of price increases. I have participated in several price increases that did not result in significantly higher churn.
𝗜𝗳 𝘆𝗼𝘂 𝗮𝗿𝗲 𝗮 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗼𝘄𝗻𝗲𝗿, 𝗮𝘀𝗸 𝘆𝗼𝘂𝗿𝘀𝗲𝗹𝗳:
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What was the last time you experimented with price changes?
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Do you factor in competition and customer knowledge?
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Can you adjust your pricing and portfolio to meet the demands of price-sensitive and price-insensitive customers alike?