Setting Your Pricing to Get Your Target Audience

Free is good, right? I mean, I’ll poke around the Apple App store looking for free tools that help me be more productive. I’ll even pay a couple of bucks if something is really slick, really helpful.

But that’s it. Go above three, maybe five, bucks and I hesitate. Is it really worth it? I’m pretty price sensitive … but I forgot to grab a Coke Zero out of my fridge this morning, which costs me about a quarter, so I can run upstairs to the vending machine and get one there … for five times the cost.

And I do that without a thought. And then there’s the $1 bag of Peanut M&Ms in the next machine over, and I have another single in my pocket … but $3 for this new fuel mileage app for my iPhone? Dude, that’s insane …

I need new tires for one of the cars. I can get these tires, which I know are great, over here for $80 each (plus mounting and balancing), but these lesser tires are $72 at this other place … That’s $32 bucks more, man … maybe I should get the cheaper tires. Tires I won’t be as happy about as I roll 50,000 miles underneath them over the next few years …

See? We’re all whacked out when it comes to prices. We have lost all sense of value. (Weddings? Don’t get me started on weddings. You want a $5,000 dress you’ll wear once and then stick in a box, but you won’t spend the same amount on your photos? Which you’ll look at often for many years to come?)

Jason Fried, a co-founder of 37signals, writes on Inc.com about an iPad app they developed and priced at an outrageous $9.99 and immediately got complaints from friends about the price. No one buys ten buck apps! That’s insane.

But he lays out an excellent argument for the seemingly steep price: it got them the audience they wanted.

Do you really want to be the cheap photographer? If your client is so price sensitive that a marginal cost change will freak them out, is that a customer worth having? What’s the total cost of a shoot–including the therapy you’ll need during the follow up?