PRICING IN A PANDEMIC: THERE ARE TWO SIDES TO THIS STORY.
No, this isn’t an article on price-gouging. Many of our clients remain in crisis-management due to the COVID-19 pandemic, experiencing a cash crunch in these uncertain times. The majority of businesses likely fall into this bucket. And then there are the businesses that are in the unique position of seeing an increase in revenue due to the COVID crisis. So what’s the best approach to pricing in a pandemic?
Begin with the human-side of things.
Consider offering discounts to those hit hardest or those most affected by COVID. Discounts for essential workers for example. Or you could donate a percentage of proceeds to a cause that is meaningful to you during this moment in history. Not only are you helping out those in need but it also offers an opportunity for conversation around your product or services which is a nice marketing pitch. You don’t just want to create a halo effect but the actions you take in this defining moment can build goodwill within your network moving forward.
Related Read: The Do’s And Don’ts Of Pricing Your Product
Offer a trial or sample.
It’s harder now to acquire paying customers. Offer a teaser of your product or discounted-use for a set amount of time. Either a 4-week trial or a few samples sent with an ask to subscribe could go a long way in building a bigger customer base and driving interest. Use these offers to build your database with the hopes of converting them to paying customers later on during the recovery.
Some of our clients that have a tiered SaaS model are seeing users downgrade to lower tiers. This may seem dire in the moment but retaining them as an active user (even if it’s at a free level) is still better than losing them completely and having to get them back later. Don’t aim to optimize for max revenue right now, instead plan to build your customer base for future upturn.
If you are one of the lucky few businesses that is doing well during the pandemic, you may consider lowering some prices or fees to yield higher volume. Even at a discount this can sometimes generate higher revenue. The altruistic approach in turn helps your brand.
Consider flexibility over lifetime sign-ups.
Rethink the long-play sales approach. Now isn’t the time to go after lifelong subscribers. Too many people are facing such great uncertainty that you’re better off being flexible with your pricing than rigid. A few examples:
- If you’re a consumer products company, you could offer a percentage off for anyone who purchases a larger volume of inventory.
- SaaS companies have a tremendous opportunity with so many people working from home. Try teasing out your services to offer more basic packages with even more add-ons so customers can customize your product as much as possible. Having more pricing tiers is better than more customer churn right now.
That said, do go ahead and give people big and special discounts right now. Offer discounts for those people who are interested in either paying for a subscription or service upfront for a longer period of time. If you make it very clear that it is a one-time thing or due to the current climate, you can offer these without harming your value proposition long-term.
Remember to address your current customer base.
We don’t just mean send out an email. Strengthen your current customer-base and commitment to your product by showing your appreciation. Are there rewards or points you can offer for continuing loyalty? A special sale just for your existing customers?
If you have a smaller customer base or you have a lower-volume professional service model, like us for example, exercise the surprise and delight concept. Taking the time to connect with each client holds a lot of benefit. Enhancing your product or “gifting” your time is both reassuring and beneficial to retaining your customers through financial hardships. After reaching out to each of our clients and assisting many with their PPP applications I heard a lot of positive feedback and gratitude for taking the extra time to connect and help; especially those clients that now know they can keep employees on the payroll longer.
And by all means, don’t forget your value proposition.
We’ve always touted the benefits of value over barrel-pricing. And while we do think cash is more important than profit margins right now, one thing holds steady even in a pandemic. The value of your product should remain at the forefront of your pricing strategies. Don’t forget to define your value proposition and tie it to your financial strategy.