Step 3. Choose the right price
Pricing your products and services can be tricky. This in part because pricing conventions differ wildly depending on industry, season, individual brand, and other factors. We're not here to take you through the ins and outs of these complexities. We do, however, have a list of basic questions to help you get started, whether you're an individual freelancer or the head of a small team.
- What are the production and distribution costs per unit?
- What's your revenue goal?
- How much money do you expect to make?
- How much would my target customer be willing to pay?
- What are your overhead costs?
- How much do your competitors charge?
- What is a typical price for the industry?
If you have the sort of business where the transaction ends in a one-time purchase, a single price may be enough. For example, if you're running a banana stand, you only need to set the price for a banana.
If your product or service is something that can be exchanged through a single transaction, perhaps a single price may be enough. For example, you might only have to set the price for bananas at your banana stand, or the price of a one-hour session at your portrait studio.
Some products and services, however, require a more comprehensive pricing plan, one where customers might be charged for ongoing access to a service rather than a one-time license. If so, you might need to opt for a subscription-based pricing model, and consider how frequently you'll charge your customers.
For example, Toggl Track has monthly and annual subscription-based pricing, where customers are charged based on the number of users and the size of the business. Toggl Track pricing is also tiered, meaning that the price changes depending on what features you choose to sign up for.
This subscription model is comparable to other enterprise and freelancer apps on the market, but it is still competitively priced.
Step 4. Promote and sell
The first consideration for promotion is: Where and how will you sell your product? Sales should inform promotion.
And any consideration of sales and promotion should include considerations of the following:
- Where are my ideal customers?
- What's the best way to reach them?
- What are my competitors doing?
Toggl Track is an online app. We focus on digital sales directly through our site and promote our product online, through paid ads and select social media. We don't need a brick-and-mortar location, and a highway billboard just doesn't make sense for usbut neither does a Snapchat promotion.
For decades, the marketing mix and the 4 Ps of marketing have been a recognized business staple. When used effectively, the 4 Ps framework can provide a solid foundation for your marketing and business development strategies, especially if you're trying to build one from scratch. As you might have noticed in our step-by-step guide, the 4 Ps work best when you put customers first.
Is the 4 Ps Model Right for Your Business? Here Are Some Alternatives
The concept of the 4 Ps is decades old. A lot has changed since these four marketing mix elements were first introduced in the 1960s. Some have questioned whether the 4 Ps model is outdated, especially in an era of digital marketing, mobile technology and changing markets and consumer attitudes.
Others created spinoffs of the original 4 Ps model, such as the 4 Cs or SAVE model, examples of marketing mixes that aim to offset these limitations. We cover them below.
The 4 Cs model
The 4 Cs model is a marketing mix strategy that shifts the focus to the perspective of the customer rather than the seller. The four Cs are customer needs, customer costs, convenience and communication.
Robert F. Lauterborn introduced the 4 Cs in 1990, announced that the 4 Ps were outdated proposing the 4 Cs as an alternative marketing mix.
As the marketer, argued Lauterborn, you should forget about the product of the 4 Ps and consider the customer. When you break this down into a thought process, it looks like this:
- Instead of product, you should be thinking about customer wants and needs.
- Instead of place, you should be thinking about the convenience of the customer.
- Instead of price, you should be thinking about what it costs the customer to satisfy these needs.
- And instead of promotion, a one-way street, you should be thinking about communication.
The SAVE framework
The SAVE in the SAVE model stands for solution, access, value, and education. This marketing mix strategy also consists of four elements, and was also proposed as a superior alternative to the 4 Ps model. SAVE also shifts the focus away from the product to the consumer.
According to the 2013 Harvard Business Review article introducing the SAVE model, the 4 Ps model can be limiting for B2B businesses because of its excessive focus on product. According to the authors, customers are increasingly looking for comprehensive solutions.
When you break down the SAVE model into a series of elements to focus on, it looks something like this:
- Instead of product, you should be thinking about solutions. Your product might have hundreds of features, but which features specifically solve real customer needs?
- Instead of place, which suggests a fixed location, you should be thinking about access for customers.
- Instead of price, which is just a number, you should be thinking about value, which encompasses the customer's perception.
- And instead of promotion, you should be thinking of education. You win the customers over by giving them useful information and empowering them to decide rather than merely plying them with ads.
The 7 Ps framework
The 7 Ps of marketing add three Ps to the original four: packaging, positioning, and people. Brian Tracy discusses the 7 Ps in his 1998 book Million Dollar Habit.
According to Tracy, in addition to product, price, place and promotion, marketers should also be thinking specifically about how the product is packaged, how the product is positioned, and about the people who are involved in the entire process.
The marketing mix to rule them all
The 4 Ps or the 7 Ps? Or ditch it all for the SAVE model? Or an entirely new revamp not included in this guide? Why are there so many acronyms in marketing?
The good thing is that you don't necessarily need to pick one, because these models are all essentially just that: models. They can guide you into thinking about your marketing strategy, but creating the strategy is up to you.
Say your friend is developing a marketing strategy for her new business. What should she put in this plan?
Whether you begin with the 4 Ps or Cs, it's often easier to begin with a list of questions or a four-step guide--such as the one we provide above--rather than from a blank slate.
It's important that your marketing strategy remains current, and that you're able to adapt to new trends and technologies. But never hurts to have a strong grasp of the basics. Despite multiple spin offs, the 4 Ps of marketing remain a staple template in the design of a marketing plan.