Don’t Sell Yourself Short but Don’t Kid Yourself either

Posted on 3/7/15 8:00 AM by Lynn Ledford

By Lynn Ledford


Cal Elite Kids

We operate Cal Elite Kids, a successful multi-venue youth activity center in Orange County, California. Since 1993, we have grown from a small gymnastics center to a thriving operation with multiple programs, sound systems, healthy profits, and wonderful employees. 

Pricing never posed a challenge at Cal Elite because, to be honest, we didn't know any better! For 15 years we plugged along quite happily, rotely raising prices each year by some arbitrary but acceptable percentage point. What was our "pricing strategy"? We’d give some consideration to the economy and the cost of living.  Maybe we’d take a peak at our competition.  Certainly we’d consider how our business did that year.  All in all, we would spend about a day or two thinking about pricing and then we’d make the big announcement:  "4% tuition increase,  across the board. Effective January 1st." Then we'd go ahead and tick "adjust pricing strategy" off the to-do list.  ‚Does this sound familiar?



Pricing is part strategy, part science, part culture, and part crystal ball. Businesses that have successful pricing strategies employ varied and often sophisticated pricing tools to meet their goals. A successful pricing system will look to capture the largest part of the largest possible market while considering the goals of the a company's products or services, the current economic climate, and the company’s internal economic and operational position.


All these factors must be taken into consideration but every pricing strategy follows the same premise: a pricing strategy must follow its corporate strategy. This premise means that the most important factor for determining a successful pricing strategy is alignment.  In other words, your pricing should reflect who you are as a business. 


Does Apple EVER try to be the low cost leader or showcase products at 99¢?  No! For Apple, building a pricing scheme based on aggressive discounting would compromise its brand.  It’s not who they are.  What would happen at Walmart if they brought in a season of $6,000 purses? High-end exclusivity is not in line with Walmart’s corporate strategy. Neither Apple nor Walmart's strategy is better than the other, they both suit the company using it. The important takeaway is that both Apple and Walmart have carefully crafted pricing strategies that unequivocally reflect their corporate strategies. 


This is a lesson we can all take back to our centers.  Maybe we're kidding ourselves. Maybe we are trying to price at the high end of the market while our operations and customer base demand value and promotions?  Maybe we are trying to impose top of the market pricing in a run-down, undersized facility with leadership issues?  Or, maybe we're selling ourselves short.  Maybe we’ve grown comfortable with a Mom and Pop pricing scheme, holding prices below market value while our demographics reflect a booming economy and new competitors priced in the upper tiers?  Maybe we are underestimating our position, perhaps nervous to price our classes where they deserve to be priced?


Your pricing, like your curriculum, your marketing, your customer service, and all other essential operations, must be in line with your corporate strategy.  It starts with determining who you are as a company, what your values are, and what your customers love about your offering.   


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