The top is good. The bottom is good. The middle will kill you.
Your price is a signaling mechanism.
If you’re the high priced provider, like:
Cars – Mercedes
Jewelry – Tiffany
Watches – Rolex
Cookware – All Clad
Refrigerators – SubZero
…people assume you offer the best quality.
This is good.
If you’re the low-cost provider, like:
Meal – McDonald’s
Cookware – Lodge
Furniture – IKEA
…people assume you deliver an acceptable product at the lowest cost.
This is also good.
If you price in the middle, you’re saying:
“We’re not the best, so we’re not priced like the best. But we’re pretty good. We cost more than the low cost guys because we’re better than them.”
It’s not a very compelling message.
Also, it’s crowded. By definition, almost everyone is in the middle. Now you’re competing with everyone. Also not compelling.
When pricing your product or service, the top is good. The bottom is good. The middle will kill you.
