Your revenue is generated through the sale of products and services, and you have a product catalogue or a collection of packages. While in the past, the success of the wedding professionals was dependent on setting good prices, now things have changed. Nowadays there are so many revenue models that apply to service industries that there are whole libraries that address this pricing topic.
Still, the following questions will help you make the right pricing decisions and possibly help you come up with innovative pricing and revenue models.
When the brides pay their photographer, they don’t pay for award-winning photos! They pay for experience, peace of mind, and if you think about it, they pay for performance. After all, what differentiate a professional from an amateur?
The professional performs under any circumstances while the amateur needs good conditions to operate. Still, if the conditions are perfect (great quality and direction of light, both the bride and groom are models who know how to pose, even a bad photographer can capture some magnificent images.
The difference is evident when the conditions are extreme: the church is dark, the couple photo – shoot is scheduled for noon when the light is horrible, the bride and groom are normal people and not fitness models. It is then when the professional can still make the bride look gorgeous, the groom masculine through a combination of posing, lighting and injection of emotion.
Long story short, the couples pay for performance. Period!
Most professionals split the payments into three. One when the bride and groom book the services with the balance payable on the wedding day.
Why not allow the couples to make monthly payments? That flexibility helps the couple and definitely helps the professional who now has a more stable revenue stream as opposed to a windfall in the peak season and a drought during the slow one.
The major assumption is that couples pay for their own wedding. However, in many cases the couple’s parents pay for the whole wedding or the budget is divided in 3: the bride and groom pay for one third, the bride’s parents for the second third and the groom’s family for the last third.
If the bride and groom are not paying for the services, their price sensitivity is reduced. We are not advocating ripping off the couple, but we strongly encourage presenting them high end packages that offer great value to the couple.
When a bride foregoes an upgrade, even though it is the best thing for her special day, she does it because she does not have the budget. However, when the parents pay for the wedding, that situation changes.
When you go to an all you can eat restaurant, you generally eat more than usual because you don’t pay for the extra. Also, most customers overeat as they think they are receiving a better value (more food for the same price) even though such action is unhealthy and makes one feel sleepy and stuffed after such a copious meal.
Most vendors know their clients pay the price either in cash or by or through electronic transfer and credit card.
However, an innovative method would be for the client to pay part of their bill with their…brains. Ha? Yes, you heard that right!
Provide the couple a 5-10% discount or a free upgrade (an extra hour of photography, for example) to give you feedback on your product and services or things you can improve in your business.
Even better, couples can pay in referrals. Once again, say what? Yes, a bride can refer your services to her friends and you provide a 10% referral fee. In the ideal situation that the bride refers you 10 other brides, the first bride does not have to pay a cent. Of course, that rarely happens, but theoretically it is not impossible. Just very improbable.
This is one of the most difficult questions and only you can do a great job figuring out the answer.
Couples buy prestige or image when they purchase the products and services of a high end vendor.
If you offer good quality at exceptional prices, your customers buy value and your main goal is to provide unbeatable value to your brides.
When the quality of the products and service offered is mediocre, the most effective lever to attract clients is price. It is the worst situation as the couples will gravitate towards the lowest prices and that downward spiral is a vicious circle that ends in the business demise. Once the revenue declines, the professional cuts marketing costs, which in effect hurt revenue even more, so the business has to cut further and the spiral perpetuates.
The best way to avoid that situation is to differentiate your business through innovation or through branding so that your offer is not perceived as a commodity.
Nicolaj Siggelkow and Chrustian Terwiesch, 5 Questions to Consider When Pricing Smart Products, Harvard Business Review, July 04, 2019
Nicolaj Siggelkow and Chrustian Terwiesch, Connected Strategy, Harvard Business Review Press, 2019