Page 85 - Selling the Invisible: A Field Guide to Modern Marketing - PDFDrive.com

than yours; they can do the service themselves or not at all. The homeowner can
paint his own house or postpone it indefinitely; the woman with a troublesome
mole can diagnose her own ailment or refuse medical service altogether; the
aggrieved subcontractor can take his own case to court or say to hell with it.

People almost always can find a cheaper way to get your service—and few
efforts are less rewarding than trying to compete with those cheaper ways.

Beware of the rock bottom.

Pricing: A Lesson from Picasso

In many services—overnight delivery, dry cleaning, fast foods—the “product” of
the service has become a commodity, and commodity pricing rules prevail: To
the low-priced go the spoils.

But in millions of other services, pricing is a notso-simple matter of “What
Will the Market Bear?”

A lot, it often seems. A friend marvels at his older brother, who earns a
million dollars a year telling companies like Coca-Cola what the future might be.
Lawrence Tribe charges $750 an hour to read, think, and occasionally argue
cases before the Supreme Court. Film directors, great photographers, top
consultants, and many others charge enough to buy Monets.

What is talent and thought worth—and why is some worth so much? What
can you reasonably charge? Good questions. Before you answer them, consider
this story about Pablo Picasso:

A woman was strolling along a street in Paris when she spotted Picasso
sketching at a sidewalk café. Not so thrilled that she could not be slightly
presumptuous, the woman asked Picasso if he might sketch her, and charge
accordingly.

Picasso obliged. In just minutes, there she was: an original Picasso.
“And what do I owe you?” she asked.
“Five thousand francs,” he answered.
“But it only took you three minutes,” she politely reminded him.
“No,” Picasso said. “It took me all my life.”
Don’t charge by the hour. Charge by the years.

The Carpenter Corollary to the Picasso Principle