Why Hire a Pricing Consultancy for International Pricing
Today, I’m going to talk about international pricing and why it’s crucial that you use a pricing consultancy when expanding your business overseas. Why is that? Well, because everything is different. I have done business in about 40 countries and have run companies that sold globally. One of the lessons I learned is that everything is different. So, let’s explore what makes everything different.
The Challenge
Culture varies across countries, buying behavior differs in different countries, competitors vary from one country to another, availability of funds differs in different countries, payment processing can vary significantly between countries, identifying potential partners can vary depending on the market, and finally, customers’ willingness to pay varies across different countries.
Companies often make the mistake of assuming they can sell in international markets the same way they do in their home market. However, this approach rarely works. For instance, companies outside the US trying to penetrate the US market often fail to adjust their marketing, advertising, and pricing strategies.
I will tell you a funny story about this. An advert appeared on my Facebook feed for a company based in Estonia. The price was quoted in Euros instead of the local currency, US Dollars. I have a lot of international experience, but for the vast majority of US consumers having the price in Euros is not going to work. Such a mistake can lead to wasting a lot of money. I reached out to the company’s CEO on LinkedIn to let them know they needed to fix the pricing, and they did. Now the pricing is in dollars and makes much more sense.
Similarly, companies from the US expanding into South America might face challenges if they continue to sell in US dollars without considering the local currency. Additionally, marketing in English instead of the local language can hinder success. It’s basic, but many companies do not seem to understand this.
Another example is a fishing lure company that I worked with. They were very proud because they had found an attractive way to paint their fishing lure and were successful in their home market. When they came to the US, they promoted their product’s color scheme as a major selling point. As their pricing consultants, we did the willingness-to-pay research, which showed that less than 10% of the market cared about the color scheme, which they thought was their main benefit statement. Those who did care about the color had the lowest willingness to pay. So, this company was on completely the wrong track with the wrong message and the wrong product benefit push. Their price was also too high for the US market. Everything was wrong, but it was an easy fix. Adjusting marketing messages, focusing on different benefits that drive willingness to pay, and aligning the pricing with a willingness to pay in this particular market resulted in the sales taking off.
The Solution
To succeed in international markets, it is crucial to understand and adapt to the differences between your home market and the target market. This is where a pricing consultancy comes in; a price consultant can conduct willingness-to-pay research, identify the most desirable customer profile, understand product/service preferences, determine effective marketing and sales channels, and discover preferred payment methods.
We did a project for a company that expanded heavily into Indonesia. Their product was an app with in-app payments, but in Indonesia, having a credit card is uncommon, particularly amongst the younger demographic that the app was aimed at. Most people go to a kiosk or corner store and buy a coupon which they use to pay by entering the coupon number. A completely different way of paying than the home market.
To succeed in international markets, it is crucial to understand and adapt to the differences between your home market and the target market. A pricing consultancy can conduct willingness-to-pay research, identify the most desirable customer profile, understand product/service preferences, determine effective marketing and sales channels, and discover preferred payment methods.
Expanding your company overseas requires careful consideration of these details to reach your true potential. Using a pricing consultancy can help you understand customer preferences and differentiate yourself from local competitors.
Request pricing consulting services to find growth opportunities today.
