Acynic knows the price of everything and the value of nothing, according to Oscar Wilde. But what about an entrepreneur?
Richard Adams-Mercer has proved himself in the world of commerce and he thinks that price and value go hand in hand for a business owner.
His company, Parcel2Go, provides door-to-door delivery using seven of the world's biggest courier groups - and aims to provide clear, simple pricing information to customers.
In terms of insurance, for example, Adams-Mercer felt that the existing pricing strategy of rival delivery firms was not clear enough. Most only offer cover on their premium services or limit the insurance to crude banding levels, such as £5 for coverage up to £100 and £30 for coverage up to £300.
"This one-size-fits-all [approach] works OK for distributors for large companies but not companies like ours working with the general public," Adams-Mercer says.
He felt he could do better, especially since Parcel2Go, like other delivery companies, uses its own reserves to cover loss and damage. So he got his IT team to set up a system on the company's website that could offer a bespoke insurance quote to customers, based on a description of the item being delivered.
Not everything can be insured. For instance, Parcel2Go's system will recognise a phrase such as "computer monitor" and say that it can insure such a delicate item for loss but not for damage.
However, such openness has won over customers, Adams-Mercer claims. In the first six weeks of the service being offered, take up of insurance cover increased 25 per cent.
This kind of transparency is one of the reasons why the company has prospered, according to Adams-Mercer. His Bolton-based business now turns over £50m a year, handling in excess of 100,000 transactions a month.
The difficulty in setting a pricing structure is that one strategy is rarely relevant for everyone, and paradoxes abound.
At King & Allen, which started life as a travelling tailor bringing bespoke suits to the masses, the winning strategy since the recession began has been to introduce a higher price band for its service.
In 2008, its exclusive range, in which finished suits cost between £499 and £999, accounted for just 2.6 per cent of sales. The average amount spent by King & Allen customers at the time was £269.
Now, however, the situation has reversed, with 88 per cent of sales coming from the exclusive range, bringing up the average amount spent to £490.
While many customers are trading down, leading to former King & Allen clients returning to off-the-peg suits at Marks & Spencer, the business has more than compensated, with orders from former Savile Row customers seeking the same tailor-made product for less.
The irony of an affordable suit company gaining premium customers is not lost on co-founder Adam King.
"We haven't actually put our prices up at all," he says. "We've just introduced more expensive clothes."
The fact that there are myriad choices over how to charge for products is both the joy and the curse ofthe modern age, according to Doug Richard, who teaches aspiring entrepreneurs about the subject through his business, School for Start-ups.
"There have been many many more [pricing] business models created in the last 10 years than there were in the last 100 years," he says. "The worry for people is that there are pricing models they are not thinking about."
He notes that social networking technologies such as Twitter are also making pricing models available to the tiniest start-ups that were previously the preserve of large companies.
One example is the "yield-pricing" system that airlines have used successfully for decades to fill seats on their aircraft by varying prices according to the demand on particular flights.
Previously, this was only possible through expensive IT systems but Richard argues that Twitter has made demand management possible even for small shops, such as local bakers.
"All you need to do is to get all your customers to sign up for a Twitter account," he says. "Then, as your goods come out of the oven, you can send a tweet to tell them that hot-baked doughnuts will be available until noon at a cost of £1. After 30 minutes you send another message offering the same, colder doughnuts for 10p."
Roger Butterworth, former chief executive of online electronics retailer Expansys, knows something about internet pricing strategies. The business built a global following by using the efficiencies of the web to sell consumer goods at prices far lower than could be found on the high street.
Butterworth's new venture, Zutux, is an online marketplace enabling small businesses to sell products to consumers across the world. The pricing model is simple: the factory gate price, plus the cost import, plus a margin for Zutux.
"We think that's a very compelling customer-centric model, as opposed to the 'what the market will bear' model practised by many of our competitors," he says.
Butterworth adds that the pricing model fits with the business model for Zutux, which is to remove the middle men from the market.
"We aim to be the cheapest," he says. "In the current market, it's hard to have a different strategy."
Pricing strategies cannot exist in a vacuum, however. As Butterworth notes, it is also about the quality of service offered.
"Overservicing, and there-fore overcharging customers, is as bad as providing too little service," he says. "I think that's one of the lessons the success of the low-cost airlines shows us."
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