We want to thank our guest writer Calin, a pricing professional turned wedding photographer in Toronto, Canada for his contribution to this article. To enjoy his work, visit www.bycalin.com
The Equilibrium Price is Wrong Sometimes
In Economics 101, one of the main concepts is equilibrium price. This price is a result of the tug of war between the demand and offer. In plain English, the higher the demand for a product and service, the higher the price the vendor can charge.
This is exactly what airlines, hotels, car rentals and concert establishments have been doing for a long time and customers can expect wild pricing fluctuations.
However, let's suppose you are a wedding photographer, videographer, planner, officiant, photo booth owner or DJ. The wedding industry is less dynamic than hospitality and when a surge in demand occurs, we have to think twice if we raise our prices. Why?
Run Price Tests on Secondary Channels
Before you decide on raising prices, run a few tests on less important channels. For example, give your web clients a set of prices and have another pricing and packaging structure for clients who inquire through social media.
In order for your multichannel pricing strategy to work, you need to build solid price fencing. Those are barriers who do not allow the clients who contact you through one channel to take advantage or the price on a different channel.
For example, you want to offer a special pricing to Apple employees. You contact HR and through the internal portal you post an amazing price. Now, an Apple employee posts on a forum the amazing deal she got. You need to be able to defend your position when other brides request the same price.
Price fences are successfully used by airlines who charge different prices to business clients (who fly Monday to Friday) vs. consumers who go over the weekend.
Higher Prices Result in Lost Referrals
Let's look at a New York City wedding photographer for example. Post Covid19 she enjoyed a higher than usual demand for her services. However, most of her clients come through referrals and the brides expect to pay the same price as their friends (who used the photographer in the past and referred her.) If our artist raised her prices to capture the higher demand she might be in for a rude awakening.
If her Gold package was $3,000 and now she raised the price to $4,000, the potential clients referred by their friends might think the photographer is trying to rip them off. Why? In their mind, the reference price is $3,000 and this is what they expect to pay.
Suddenly, our artist will find herself in a situation where the referrals end up booking other wedding photographers. In such case, she will be forced to drop the prices to the original level. However, that poses a different challenge. Some clients who booked her paid $4,000 and when they check the updated prices, they see they overpaid for the same package. They will be outraged, ask for a discount or even book a different photographer because they stopped trusting our friend.
Unique Photos Confer Pricing Power
If an vendor can create something unique, chances are that vendor enjoys pricing power. A sustainable competitive advantage such as a proprietary technique, an extremely lean and fast organization that allows a light speed turnaround time would be examples of cases when our vendor can in fact raise prices without worries.
Well, the services the vendor commercializes are unique and the customers have no other alternative. They either pay the price or they have to find a cheaper vendor who does not offer that product or service.
Repackage and Rebrand Services
If for any reason our wedding photographer has to raise her prices (for example she was burned out last year after shooting 70 weddings), a better solution would be to rethink her packages and change their name. That way the new couples will not compare apples to apples and might accept the new prices, especially if they provide a better value.
In wedding photography repackaging is very easy. You offer a different number of hours, albums, longer/shorter engagement shoots, lead vs. associate photographers, etc.
Most artists do not rise their prices by choice! They most probably hit a rough patch and they should communicate that clearly to their customer base. Maybe the rent increased year over year. The minimum wage also went up. The company invested in cutting edge photography equipment and training.
Whatever the case may be, just explain it to the clients and chances are they will understand. After all, we are all humans and we can one day face the same challenges.
A great idea is to determine what couples really need and offer only those products and services. This reminds me of Steve Jobs' pruning of Apple product lines at a moment when Apple was headed to bankruptcy. Steve Jobs killed 70% of the products and spared only the most reliable thus saving Apple for a certain disaster.
When clients are overwhelmed with too many options, they decide not to purchase. Offer them three packages Good Better Best and the simplicity of the pricing structure will make decision making easy.
Best Approach - Do Not Raise Prices
Many of us know that pricing has an emotional side. Do you remember last Black Friday when you were able to get the deal of your life? You looked like a hero and your friends praised you for being such an intelligent shopper!
It is the same feeling the bride experiences when she books a vendor at an incredible price.
Even when the demand is strong, please think twice before raising prices. Often demand fluctuates and after the party is over, will you be hungover?
How will you justify to your clients who paid the higher price a roll back to the old/lower prices?
Regardless if you live in New York City, Toronto or Sydney, as a wedding professional you face a strong competition. Our advice is to raise your prices
What America’s Best BBQ Joint Can Teach You About Pricing by Rafi Mohammed, Harvard Business Review, November 12, 2015
Everybody Hates Uber's Surge Pricing - Here's How to Fix It, by Utpal M. Dholakia, Harvard Business Review, December 21, 2015