markgalloway.com

Yesterday, I had a great experience that confirmed an opinion I formed before opening my shop, Blacksmith Coffee Roastery.

My opinion that was confirmed…..

Forget about suggested retail price on any merchandise.  Use Amazon as your pricing guide.

This hunch was verified in a most unusual way.  In fact, the other title for this article could have been, “Be Careful About Assuming Anything About Your Customers in Establishing Prices.”

Here’s what happened……

A Beachy Amish family came to the shop and was interested in learning about coffee roasting.  The Beachy Amish are an Anabaptist denomination that drive cars, yet still adhere to a “plain” lifestyle.  Anyway, after talking with them for some time, one of the older sons, whom I would estimate was in his early 20’s, yet sporting the classic shaved musache appearance representative of the Amish and conservative Mennonites, asked me how much I sell an AeroPress for.  I told him that I thought it was about $28, but we could look it up on Amazon to be sure, as I just price match everything that way.

He smiled and said, “Yeah, while you were talking to my dad I checked the Amazon price on my Blackberry.”  Anyway, he proceeded to tell me that he loves shopping on Amazon.  Oh, and he bought the AeroPress, but I don’t think he would have if I had tried to gouge him under the assumption that “he’s Amish, therefore he’s not tuned in to price comparison shopping online.”

I’m amazed at the number of brick and mortar retailers who blatantly ignore the ecommerce marketplace.  The ostrich-with-head-in-the-sand mentality doesn’t work anymore, because your customers probably know more about your product and competition than you do!

Do you give up margins? Maybe.  But, wouldn’t you rather sell a product at a lower margin than not sell it at all? The tendency for merchants, restaurants and sellers to raise prices to compensate for a perceived shrinking customer base is suicidal.

You see it all the time in little towns.  Some small town folks will continue to support local merchants and view inflated prices as a sort-of “convenience tax”.  But, I wouldn’t build a business model around it as it’s the exception, not the rule.

Sure, people will pay a premium for quality service, but these are for products dependent on service or superior product knowledge….ie: appliances or electronics, automobiles, fine jewelry, double-paned windows, etc.  Don’t fool yourself into thinking people will pay more for your toaster-oven inventory just because you’re “in-town”.  Your coffee filters, apple peelers, curling irons, etc. don’t lend themself to inflated pricing in the name of convenience.  Worst case scenario is that your business earns a reputation of being “overpriced”.

Brag about price-matching Amazon and know that you might sacrifice margins on these products, knowing that your customers may spend money on other purchases with higher margins. The focus isn’t really to sell your widgets, it’s to get warm bodies in your door.  Then you can sell to them.

Furthermore, here in fly-over country, a marketing/press release/advertising effort telling the world that your prices meet or beat the best online prices could bring in far more traffic than your realize.

To test this out conclusively, I’ll try it myself as I’m close to implementing my own sales and marketing plan for Blacksmith Coffee Roastery.  When there’s something decisive to report, I will.

In the meantime, consider your own pricing situation and adjust accordingly.  Price matching the lowest internet retailers may be the one thing that makes you more money, as illogical as it may seem.