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How to Price Aviation Products & Services

(upbeat music) – Welcome to this week's episode, what is the best pricing strategy for aviation products? – Oh, this ought to be interesting (laughs) – So, I'm Paula Williams

– And I'm John Williams – And we are ABCI, and ABCI's mission is– – To help you ladies and gentlemen out there in the aviation world send more products and services, and I'm showing myself to be old, but I still want to say ladies and gentlemen – Okay, you can say that, I'm not gonna argue with you – But it's inclusive of anybody else who wants to be out there, too – Absolutely, right

We are all of a sudden checking all of our pronouns and everything else, and no disrespect intended for anyone else, but we do like the kinda traditional approach in everything else, but I'm sure we'll be getting comments on this one So, that being said, what is the best pricing strategy for aviation products? – I think it would depend – I think so, too, and we'll be talking about that That's a good answer Okay, so this is one of the topics that we talked about a lot in our aviation sales and marketing lab, a lot of our clients want help with pricing, positioning their products and things like that, looking at how their product fits into the map of their competitive landscape, all of those things, and so a lot of times in people's office hours, that's what we do, is talk about how to set the best price for their product

– Back in the day when they were teaching marketing, the old school words, the four P's were, products, or was it position – Product, position, price and performance, yeah, I think those were it I've seen different variations of that, though

– Nowadays, yeah, I know – So, people were taking some poetic license with the four P's But pricing being a really important one, and this is one that can give your salespeople a whole lot of confidence if they feel like there's been a lot of thought put into your price, and that it's the right price for the market A lot of times, people have a lot of insecurity about, is my price too high Not much insecurity about is my price too low

– Well, but maybe there should be, because the right price doesn't mean low price – Yeah, we're gonna talk about that in nauseating detail in just a minute Hopefully not nauseating All right, so anyway, about our sales and marketing lab, this is our tools, skills, and networking recipe, or formula, or lab, if we wanna be mad scientists about this The best combination of components that we've put together to help people be successful in aviation sales and marketing

So if you join by January 31st, happy new year, by the way Then you will be included in our next session of our aviation sales basics course And that is really really, it's a $499 value, and it's a really good deal for people who are coming into sales or marketing for the first time, from other parts of aviation Maybe a pilot or an engineer or a product specialist, yeah, a mechanic, whatever you are, if you're finding yourself doing sales and marketing, it might scare the crap out of you If you haven't done it before, and this course is for you

Or, if you are coming into marketing, and you've sold real estate, or you've sold cars, or you've sold something else, and you've not sold anything in the aviation industry, this is also for you, so it really– – Aviation marketing – Right, helps you put that together in the most positive sort of way, so you can use what you've got, and make up for what you don't Right, okay Okay, so there are many pricing strategies, and if you pick up any marketing textbook, you're gonna see things like this, right, the pricing quadrants, where you've got the low quality versus high quality, the low price versus high price, you've got different strategies in there The economy pricing, of course, is where you do the lowest possible price

In order to do that, though, you often have to cut corners on your quality, so you end up with a low quality product as well So, that's the Wal-Mart pricing model, right? Low prices everyday, mkay – Well it's not just them, but that approach – Right, if we go low quality and high price, that's what we call a skimming model, where you're taking the best possible clients, you can usually only do that once, though, before they figure out that your product is low quality Okay, and that would be things like the, if you watch late night TV, they have these infomercials about products that are maybe not the best quality, but it's the first time they've been on the market, and nobody's ever thought of this particular way to trim your cat's nails before, and so it's innovative and everything else, and so they sell a lot of them at a really high price, before everybody else gets into the market, and they start improving on the product and it shows up in stores

Not sold in stores, that's usually a pretty good indication it's skimming, right? – Yes – I think that's probably the worst strategy for aviation – Oh, that would just put you out of business very soon – Exactly, okay, and then we go back to the quadrant, and we go to low price, high quality Sometimes people will do this with what we call a loss leader, or something like that, where if you have a gateway drug to your particular product or service, like a discovery flight for a flight school, something along those lines, you want to make that, you okay? Okay, you want to make that a super high quality experience, at the lowest possible price, because you know that that person will likely become a customer

And if you're really good at doing those, then you can do that market penetration pricing on some of your products and services If you did it on everything, you'd go out of business, so – Right – Mkay, and then what's left over is high quality and high price, and that's what we call a premium pricing strategy, right? – What kind of blurs this is the notion these days that the middle class is not going away, it's reducing – Right

– And some of the groups that we are members of, marketing-wise, say that you either have to go all out for the low end of the market or all out for the high end of the market, and forget the middle – Right, so you'll do really really well if you're a Wal-Mart, and you're going for the low price and low quality, and you've got the economies of scale to do that, there's not many situations like that in aviation – Not that, no, I can't think of any – Right, so most often, if we had to say this is the strategy that we recommend most often, it's a premium pricing strategy – Absolutely, and we're gonna talk about that

– Yeah, absolutely, we got a lot of means and methods to do that, so which works best for aviation, it is almost always a premium quality, and we're not talking about airline tickets, we're talking about business aviation, general aviation, civil aviation, military aviation, even, if you sell products and services to the military Those kinds of things, you don't necessarily want to go for the economy pricing model, right? You wanna make sure that your products are super high quality, which kind of precludes that whole idea So I have a story, exploiting my child for marketing purposes This is Mickey, he's the bald one in the picture He is a, right now he's at Fort Benning at officer's training school, and OCS, and he was given just recently a list of gear to buy, right? And the list had a range of different options that people could choose, and this whole list would cost you, and this is clothing, camping gear, other kinds of things that they're going to need while they're doing the OCS program, right? – I mean where else can you go where somebody will give you money to go buy camping gear to go out and camp and have a good time? – Right, well they didn't give them money, they actually had to spend their own, but they are getting paid

– They get reimbursed – Right, that's true, so they have some options in here, they can spend anywhere between 600 and 1000 dollars to buy this whole list of stuff, right? But they don't have a whole lot of time to research what's GORE-TEX, what are all the reasons that I would spend more rather than less for any particular item on this list So the options for all of the items on this list, and this included everything from socks to sleeping bags, to all of their clothing, all of their outdoor gear, everything else, they didn't have any time to research the options, they just had to go to the BX – So in other words, you're gonna spend 600 dollars or if you go the high end, you're gonna spend a grand – Exactly, so given those choices, and given the fact that you only wanna do OCS once, it is not the world's most fun experience, right? And it's a competitive situation, so the better you do in this environment, the more options you're gonna have in the future, so this is a really important time to not have a blister, or not have a sprained ankle, or not have whatever happen to you, so if you can invest in better equipment, that's better, right? – Better for the body

– Right, exactly So given those examples, I was talking to Mickey the other day on the phone, and he's just given all of that information, or that lack of information, "What I did was bought the top of the line "of every item, going down the list" And I totally, as a mom, I'm totally on board with that, I think that's a really smart strategy, because you do not want the equipment to be the reason that something doesn't work out for you – Exactly – Right, so get the good socks, every single time, and a lot of people in aviation came from the military

– Well, and we do that for your corporate equipment as well – Right, we buy really good equipment, and we don't buy it very often, so this microphone is 40 years old? – It was built in 47, so it's 60 plus years old – Exactly My computer is six years old, but we bought it the top of the line thing that could be bought at that time, and we keep it forever All of our vehicles we keep forever, all of our aircraft we keep forever when we can

So all of those things are top of the line, and I think a lot of aviation people have that same mindset Here's another example, this is a Rolex Sea-Dweller solid gold and steel watch, right? – It's a picture of one, anyway – It's a picture of one, that's true Okay, we don't actually have one Anyway, nice watch

Very very nice watch It retails for $17,895, right? So if you happened across someone who was selling one for $40, what would you say? – Run – Exactly, you know that there's something – If they're selling it as new for 40 bucks – Or not, even if they're selling it as used for 40 bucks Your first thought is, "Is it stolen?" – Or is it real? – Is it real? – Lot of knock-offs out there – Is it broken? There's something wrong with it, there must be some reason that this is the price that it is So, there is a concept called reassuringly expensive, and it's the same thing, when I go buy aspirin, the Food and Drug Administration says that aspirin has to be aspirin, right? It is the exact same chemical formula whether you buy the store brand, or whether you buy Bayer aspirin

– Right, or the – The name brand – Yeah, the name brand, or whatever the knockoff version is

– Exactly, I will always buy the name brand Even though there is no logical reason for me to do so, I still feel reassured knowing that this name brand is a good thing in some ways, they've invested a lot in their name and their reputation, and I feel better about giving my family or whomever an aspirin that is a Bayer aspirin as opposed to a store brand aspirin Logical or otherwise, we have that bias – Same thing when you have your car repaired, do you go with aftermarket stuff or OEM? – Mhm, and OEM is always more expensive – It's always more expensive, and most of the time you get what you pay for, but if you don't pay for it, you certainly don't get it

– Right, exactly So those things being said, a lot of salespeople kinda fall into the feeling that everybody's a bargain hunter, and everybody's gonna go for the lowest price, that is not necessarily true, I think a lot of aviation people are programmed the opposite way, or at least our biases are the opposite – Yeah, the interesting thing is airline tickets, because that's what they based everything on, is everybody wants the cheapest ticket, so you get a cheap ticket, then they add on for this, they add on for that, and by the time you get done, it wasn't the cheapest ticket anyway – Exactly, and I think people that buy airline tickets are not the same market that we're talking about here – No, they're not, just an example

– Yeah, exactly Okay, so our position most of the time, not knowing anything else, usually is to price high and justify And that's a nice little rhyme we use, so it's easy to remember, price high and justify You want to make it worth more than your competitor's offer – And that's very important

– Exactly, the value has to be there, it has to be worth more to your customer in the currency that he uses, which is either time savings or convenience, or ease of use, or whatever's important to your customer, it has to be worth more than your competitor's offer We also advocate to never never discount your price without a credible reason – And it can't be a discount forever, it's a discount for some amount of time, and reason's gotta be there, and it's gotta be something the potential buyer grasps without even thinking about it – Yeah, it passes the smell test, it's last year's model, or it is something where you've got a temporary advantage in your market, or you're starting a new partnership with someone and you shut throwing in a joint offer, something of that nature where you're testing out, market testing a new product, some reason that it will be less expensive, because otherwise, you're losing your integrity, your price integrity – And you'll never get it back

– Right, and you look at Apple and some of the other companies that have really good cost integrity, and you will never see their products discounted without a really good reason, like the next version just came out, and so the– – Well, so some of the aftermarket sellers of Apple products may price it down, but they're taking the hit, Apple's not – Right, and Apple may not have control over what some of the aftermarket folks do, but you will never see an Apple product reduced in price or discounted without a really good reason, right? Okay, so the other thing about this is that you have to very clearly communicate the value of whatever it is that you're offering And you have to be able to express that in a way that people will understand, so that they get it, and you can put it into a sentence, you can put it into a metaphor One of my favorite metaphors is, your computer system that's like a warehouse You can go in and you can find what you need more easily and things like that, rather than talking about all of the components of the software, you talk about why it is useful, why is this more valuable to your customer, how much time is it going to save them, how much money is it going to save them, what opportunities is it going to give them that they didn't have before? So you wanna make sure that whenever you talk about your product, you can clearly communicate that value

– And that started with IBM – Right, exactly Another way to do that is to be consistent in your branding, so if you're selling that Rolex on a street corner, and you're wearing a trench coat, your branding is not consistent with Rolex So you've got a cognitive dissonance going on in your customer's mind, was that too nerdy? That was really nerdy, let me try that again Okay, so if you are selling a really expensive product and you show up doing a teleconference dressed in your pajamas, and it looks like you're in your parents' basement, that is cognitive dissonance, that means you're not showing up in a way that represents an expensive product

Okay, so what the way that you answer the phone, do you sound like a company that gets paid hundreds of thousands of dollars for your product or service? If yes, great, if not, you've got a cognitive dissonance problem, and you've got an inconsistency problem, and you're not communicating value What you wear to work, if you are showing up in flip flops, and you're selling a fantastic product, that is worth a lot of money, then again, you're not communicating that value, unless it is a pool party, in which case you wear very expensive flip flops, right? – And we've been to one of those – Exactly, it's just like "Okay" Or we've had clients that say "I'm going to a pool party with my customer, "and I want to show up dressed appropriately" In that case, we throw them on the mercy of the retail industry, and whatever communicates that best

So costuming is important, the way you speak is important, all of that stuff has to be in line, so that everything matches, right? – Yeah, and you can show up unkempt to a sales meeting, and you may make a sale But you're making the company look back – Well, you're working against that consistency, right? So everything that you can do to add to that consistency, and communicate that message, and communicate "We are the best, we really respect you, "we're gonna dress up when we show up, "we're going to answer the phone promptly, "and we're gonna take care of you, "all of those things are in line "with what people expect from somebody "that they're gonna spend a lot of money with" Okay, all right, so to clearly give you an example of how we communicate value, our sales and marketing lab is a $279 investment, or $179 investment per month, that has more than 10 times that value in terms of the software, the tools, the networking, and everything else, in fact if you join by January 31st, you also get our sales and marketing, or our sales basic course, which is an online course that has a retail value of 499, a lot of people have taken it at 499, and loved it, so that's a really good opportunity for you to learn your sales skills, and be able to present that value in a way that makes sense, and one of the things that we do in that course is to rehearse your sales presentation, and do sales calls, and things like that, so we can help you improve your video conferencing skills if that's the way that you're selling these days, and a lot of people are, a lot of people are new to video conferencing, or, just plain old sales calls, your direct mail, your other things, ways that you present your product or service – How you prepare for the call before you make it

– Exactly, so you can join our online course with coaching included in that, so it doesn't matter what your schedule is, or how that all works, we'll find a way to make it work for you, and we work with people all over the world and help them develop their sales skills, right? – Yes we do – Okay, so go sell more stuff – Yep, America certainly needs the business, the more of it we make the better we are, Zig Ziglar – Yep, we love Zig, most of the time Thanks for joining us, and we'll see you next week

– See you next time (upbeat music)

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