Five, five, five-dollar footlong. Who doesn’t remember that jingle? During the last recession, Subway announced their promotion for footlong subs priced at $5.00. Now, nearly 10 years after they introduced it, Subway has ended $5.00 pricing on the big sandwiches. It is about time! It is also a good reminder that although we want pricing strategies to be durable, individual prices should change with circumstances.
I am often asked where a client can lower prices to get more volume. Typically, they want to know which segments or customers are buying elsewhere and would switch to our client if offered lower prices. It seems like a simple question, but the answer is rarely simple and often frustrating to our clients. Our view is if you care about profitability, lowering prices to chase volume is often a bad pricing strategy.
Two weeks ago I wrote a blog post, Don’t Get Angry About Prices– Change Your Buying Behavior, in which I opined getting angry about pricing accomplishes nothing. Shortly thereafter, I read an article in the Washington Post, Do Airline Tickets Need Warning Labels?, followed by JetBlue and United raising their baggage fees. Meanwhile Southwest still doesn’t charge for checked bags. These things all reiterated my view that companies should compete by differentiating themselves in whichever way they believe adds the most customer value, including transparent pricing or multi-part pricing. Read more