Stormes: Don't price the product — price the experience

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Sean Stormes

Why do people spend $5 two or three times a day on their favorite Starbucks beverage, or drop $500 for a Nordstrom outfit, or pay the same (or more) as other airlines charge but prefer flying Southwest Airlines? Can't coffee-based drinks, high-end clothing and flights be found less expensively?

The answer is "yes," which leads me to two more vital questions: How is your product or service priced? Is your pricing model maximizing profitability? In just a moment, I'll share a pricing secret that could make the difference between incremental growth or the explosive type you've only dreamed about.

When Apple debuted the iPhone 6, images of bent frames caused some to predict the demise of the iconic tech giant. "Well, they finally screwed up!" was an often-heard chant. Like the naysayers didn't remember the maps app or operating system snafus from past Apple launches? In other words, this wasn't the first time Tim Cook's juggernaut was accused of screwing up.

In fact, it seems to me that Apple was (really) late to the party with an enlarged phone screen. Yet somehow the resilient fruit plows along nicely, cognizant of the secret sauce that earns it forgiveness for such hiccups. How successful is Apple, in the face of many financial analysts who recommended a "hold" on the stock earlier in 2014?

"The stock has been on a tear this year, gaining nearly 50%. That's a remarkable rally for a stock this size (it's huge). But analysts see the company boosting its market share due to the larger iPhone, which finally catches up to the larger screens of competitors. Analysts see the company earning $2.53 a share during the period, up 22% from the same period a year ago." (Source: S&P Capital IQ; USA Today Research; November 2014)

Sean Stormes | www.seanstormes.com | Twitter.com/seanstormes | Stormes is a speaker, author and president of The Third Door.