The WAY to WOW Shows
Pricing Is Strategy
March 18, 2026
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[0:00] Who are you? And where are you going? What do you want? Hello and welcome to People Making Money. I'm your host, Kevin Beml, and I'm here every Wednesday at 10:00 a.m. Pacific time to talk about job hunting, starting and running a business, and building wealth. So the whole financial side of our lives and today I'm going to be focus focusing on

[0:35] something that's uh kind of a little more um on the business side of things uh starting and running a business and that has to do the topic is pricing is strategy. Now like so many of these topics uh where something in from a job hunting perspective could also apply to running a business. I think that this topic uh which again primarily relates to running a business can also apply to to you if if you are job hunting or

[1:12] you're an employee because in in the end the compensation package uh that your employer gives you is your pricing strategy, right? And so the question really comes down to uh how are how are you positioning yourself in the job market and are you doing so in a way that maximizes the price for your labor i.e. your salary benefits you know equity package or whatever it is um that that is uh

[1:47] typical in in in your industry. So, just because you're not running a business, uh I I I I would say you might want to take a look at this episode and see uh how how it might help you better position yourself. Um especially if you're, you know, dissatisfied with the compensation that that you're getting. So, I I want to start today's show, formal part of today's show, I guess, by giving you an example. This is actually from what I somewhat

[2:22] tongue-in-cheek refer to as Kevin 1.0. So my first professional endeavor was I started a commercial real estate company here in Los Angeles. This was in 1986. I had that business for 20 years. I sold it when I joined the Navy. And I I remember at um I think I've been in business for maybe I want to say about 10 years, something like that. uh maybe a little bit less than that. And I was having uh one of the primary activities I did in my business was real estate appraisal and consulting. And I

[2:59] was having coffee with a a friend. Um it was actually at at a coffee place that's no longer there. The coffee being on South Beverly Drive in Beverly Hills. Um, but in any event, I was having coffee with a friend who was a business appraiser and we were talking about how we'd like to make more money, but we weren't really sure, you know, how to do that. We felt kind of constrained by the market. And and so I suggested to her, I said, "Look, why don't we raise our hourly fees by,

[3:34] at the time, I think it was $50 an hour, which was, you know, quite a bit." And I said, ' Let's just see what happens, you know. And so we did. And strangely enough, we we not we didn't lose any clients. Um and in fact, we got more clients because we were more expensive. And so then we did the same thing again and it worked. It worked the same thing. And this is this is how I discovered that um there is a there is a perception of value that

[4:12] people have when prices are higher. Okay. So why can Ralph Lauren or Balenciaga or uh Club Monaco why can these clothing stores get the kind of prices that they get? So, you know, a pair of men's pants at uh um Ralph Lauren, you're you're talking probably several hundred, right? As opposed to going to, I don't know, Target where a pair of pants is I I I guess I don't know. I haven't been there

[4:48] in a long time, but I would guess it's, you know, well under $100, right? So, why can Ralph Lauren charge so much more? Well, part of it is that there is higher quality in um the clothing that one gets from a ra from a store like Ralph Lauren. But also there is a perception that the clothing that Ralph Lauren makes or Lauren, however it's pronounced, makes is higher quality and so people will pay more money for it. There's also the prestige value of, you

[5:23] know, wearing a Ralph Lauren clothes, etc., Right. That's true of all the luxury brands. A couple of ones I I you a couple of others that I mentioned just a few minutes ago. So I think we we need to dig into this idea of price is strategy to understand where we fit in with respect to our businesses. Now I I I want to you know keep a broad uh definition of price. We tend to think of price as something charged for goods, whether it's food, clothing, gasoline,

[5:58] cars, right? But what the what we charge for services, whether it's professional services, whether it's things like uh you know, trades, plumbing, electrical, HVAC. In fact, you may hear some stomping above my head during this episode because thank goodness my my u air conditioning unit is being fixed today. We've been having 90 plus degree weather here at the end of winter in Los Angeles. Um what what's charged for services as well? That's also a form of price. Okay.

[6:33] So just because you don't sell a product or you don't sell goods doesn't mean you don't need a pricing strategy. Quite the contrary. Everybody who everybody who is working whether in their own business or for someone else needs a pricing strategy. So I have five thoughts on this topic. The first one is price signals value to the market and that's that's the sort of the point of that little story I told you from you know the Kevin 1.0 time in my life. So many many people use price as a proxy

[7:10] for quality. Okay, especially when they don't have full information. There is an assumption that if something is more expensive, it is higher quality. Now, generally that's true. Okay? I can tell you in legal services. So lawyers that charge the lawyers with whom I've dealt who charge higher fees generally have greater knowledge, greater experience, greater skills.

[7:47] Okay? That's why they're able to get the higher fees. Okay? And lawyers who charge lower fees generally are not as experienced, right? And so one of the ways they compete is by charging lower fees. So that that's an example on the services side of things. Okay. So and I I gave you an example on the product side with you know Ralph Lauren. So, when a price is low or especially when it's too low, now that's that's a somewhat subjective

[8:23] um that's a subjective uh qualifier there. I mean, what is too low? Too low. So, what's too low for me may be different than what's too low for you. But because we're talking about how customers and clients perceive the market. So when a price is too low in the eyes of the client or customer, it that may undermine trust in what's being sold and it makes the buyer, you know, suspect that the product or service is inferior,

[9:00] right? And so that erodess brand perception. So sometimes premium pricing can actually increase demand, right? And um there are um a particular kind of purse out there and I'm I'm going up on the name of it, but uh used ones will I think sell for as much or more than new ones because these purses are all sold at very very high prices. is there's a limited number

[9:35] made of each model. Uh and and over the years um they it's they've become sort of the thing that successful women want and so it has increased demand. You see this, you see this particularly in the luxury goods uh segment where pricing a product in such a way that clearly only a select group of people can afford it actually increases the demand because

[10:10] people want to be in that elite category. So another product example is uh iPhones. So, Apple consistently prices iPhones at the premium range above the cost of other cellular phones, right? And they do that uh because they they they they are positioning their brand around the design, the the the the reliability, sort of the status. Um and this helps them maintain both uh customer loyalty

[10:49] because of the prestige factor and strong margins uh on on the sale of of iPhones, right? Um and it also helps keep people in the, you know, Apple ecosystem, if you will. So I have an iPhone sitting right here in my charger. I'm broadcasting from an iMac. If you look behind me, I have an iPad. On my desk is a MacBook, you know. I mean, I'm firmly enscconced in the Apple ecosystem. Have been literally my entire

[11:26] professional life outside of the Navy. So, I you know, all I can tell you is non-Apple PCs hate me. So uh so you know and and Apple gets a premium price on not just on iPhones on its computers and really everything that it builds um because it has such a strong customer following because it's built such a strong brand and people perceive Apple as making quality products that are worth the extra cost. Okay. So uh price price

[12:02] often times signals value uh value in the sense of high quality in the market at val not value as as as meaning uh a good value like a good buy. Okay. So the the the sort of opposite of that is cheap prices often attract the wrong customers. Now, you could say, "Well, there's no such thing as a wrong customer. A a sale is a sale." Well, that's true, but low prices often attract very price

[12:38] sensitive customers. And and and people who are price sensitive have very low loyalty. So, if they can find something for a few dollars or a few pennies less than your product, they're not going to be loyal. they're going to go and buy the other product. Right? This is the sort of tugofwar that goes on between uh white label brands like a a store brand. Um I'm trying to think of what Ralph's and and uh Kroger's store brand is. Um I

[13:14] mean you see Kroger labeled products, right? So you have a a can of um I don't know canned vegetables that's Kroger brand, right? And on this shelf next to it, you might have something that's, you know, Green Giant. And the Green Giant is going to be a higher price. Okay? And part of it is the part of that is the perceived value. Green Giant has been making vegetables for I don't know 100 years, something like that. Canning vegetables, I should say, canning and freezing them. So people who buy store labeled brands tend to be the most price

[13:51] sensitive consumers. Um, and they have low loyalty. So, if they can get it, you know, 10 cents cheaper uh w with another brand, for sure they're going to do that. Now, by the way, I'm not I'm not putting them down for doing that when when you know when someone is price sensitive and that's the most important thing. So, that's that's their decision to make. Okay. And and I I will say that as just an aside, when we're talking about grocery products, especially things like canned goods and such, uh these days,

[14:26] the way food is processed, a store a store-labeled brand may be the exact same product as as a name brand, uh because a lot of of food is processed at factories and at the same factories. So it's it's not like you know 30 40 50 years ago when uh the facilities you know were were uh segregated if you will and you know I I I don't want to say I don't know if Green Giant you know makes their products in the same place as Kroger brand but but uh a a brandame

[15:03] company would be making all of their own products today. That's not necessarily the case. Okay. they may they may contract out uh a particular product and then have their label put on it. Okay. So, but the reality is is that um there is much a much lower loyalty factor when when one is when you're pricing your goods or services as cheaply as possible trying to undercut the market. Okay. And so when but when that is the pricing

[15:38] strategy pursued. So what it does is it puts constant pressure on margins and it causes a high churn of customers, right? And so businesses who are using you know lowest price as as their um you know competitive advantage, right? Um they are they are constantly under they tend to be I shouldn't say are they tend to be constantly under financial pressure, right? And so if you look at a marketplace like Amazon, okay, many of the sellers there

[16:17] basically compete on price, okay, and and they commoditize a lot of the categories. And if you've ever done a search on Amazon, right, you'll see you can you can actually sort by price and see who the lowest one is. And depending on what it is, what the product is, it may not, you know, the quality of it may not make that much of a difference. And so the lowest priced one is is the one with which to go. Okay? But you'll also see that Amazon will highlight, you know, most popular or best buy or whatever. And it's not always the lowest price one. And I think

[16:53] that's that's an attempt by Amazon and sellers on Amazon to not fall into this trap of you know being the low you know competing on price basically. So the the the bottom line though is cheap pricing to a large extent is kind of a race to the bottom. So it's a constant process of trying to ring out ever grading greater savings from one's manufacturing processes or if you're a service provider ring out ever greater uh efficiencies in in your ability to perform the service

[17:30] so that you can lower your prices and and remain that that you know remain the most competitive in the in the pricing category. And that can be very that can be very difficult. That's a that's a tough tough environment in which to compete. Okay. So another issue that arises from low prices or underpricing the market or competing on price is that it can starve the business of the capital it needs for investment. So

[18:05] uh you know part of what pricing margins fund in addition to profits for the company which is what it uses to return uh to give a return on in on on investment to the people who invested to start the company which by the way could be a small company. You may be the sole investor but you still should get a return on your investment. But in addition to profit being part of that margin is the cost for product development, for marketing and customer support, right? And so often what

[18:40] happens when a low price uh strategy is pursued is it it doesn't leave sufficient margin so that a company can invest in product development. It can de invest in marketing and brand building and it can invest in strong customer support. Okay. And and and if you've ever like if you've ever called uh customer support for say you know cellular phone service, it's it's pretty mediocre because the

[19:17] bottom line is these days internet service, cellular phone service, these are all just commodities, right? I know for myself about a year ago I reviewed my costs for those services. I changed carriers and dropped them by uh by about 70%. Right? Okay. So now here it is a year later and the carrier that I have has more than doubled what I was paying for those services. Or actually not more than doubled but roughly doubled what I was paying. And I I I already knew I was

[19:53] going to have to shop them, you know, again. I have I have I have a note in my Apple reminders to to, you know, shop my cell phone and internet service. Uh because the bottom line is these companies all compete on price. Their customer service is pretty mediocre when all is said and done. Um, you know, the reason I changed last time is I called the customer service of the company that I currently had to see if I could negotiate a lower price. And all the customer service rep wanted to do was try and sell me additional services like

[20:29] like, you know, internet TV and all that kind of stuff. And I kept saying, "Not interested in more services. Looking to lower my bill. If you can't lower my bill, this call is done." And the person said, "Well, but don't you want this other service?" And I said, "No, thank you. Goodbye, you know, click, right? That's what I mean about poor customer service. I I I think that um despite the high prices, they because they still overall were competing in a commoditized um you know, business that they just they they couldn't afford strong

[21:04] customer service is really what it came down to. So um you know and then again if if the same thing is true of product development. So um you know I I think it's AT&T is you know building out their fiber optic network or whatever they have right. So it's very costly to do that. I was listening to um a podcast with the CEO of I think it was AT&T and he was saying that they're you know in another year or two um they're going to

[21:39] be done with that with that process. It was a major capital investment and so investors should see an improvement in terms of the investment performance of their stock because all of a sudden they'll be relieved from the huge capital needs of building out this network etc etc etc right so perhaps you know you know when and when you're but AT&T is still competing as a commodity and so perhaps you know they're giving a heavy investment in

[22:14] product development and and maybe they're having to not make as big an investment in marketing and customer support. So once they they can uh you know reduce their investment in product development so then maybe they'll be able to shift more sources into marketing and customer support or maybe they'll lower prices in order to try and gain market share. Right? That's that is the whole juggling that goes on when one is underpricing um one's service or product um it starves the business of those

[22:49] investments. So uh so competition that has better margins can out innovate and out market a lowpriced competitor. right now that that um that assumes that competitors with better margins are able to convince their customers to pay the margins. And and that's that's where a low pricing strategy can become problematic because if one of your competitors

[23:24] uh is able to establish a strong enough brand that they are able to get what amounts to premium pricing. Okay. while the rest of the people in that category or not the rest of the people, the rest of the companies in that category are still pursuing a lowp price strategy, right? So then they're in a position to potentially take a huge swath of that market uh the the maybe the part of the market that you know on the margins does care about value and leave and and does

[24:02] have a customer loyalty and then leave the rest of the more volatile market to the other players. Right? And so that's where I think um you know we need to be very careful about how we position ourselves from a pricing strategy standpoint in the market. Okay, let's take a quick break. We'll be back for more. When life brings unexpected changes, managing inherited property shouldn't add to your stress. Magnum Properties specializes in probate and trust real

[24:39] estate management. We handle the complexities while you focus on what matters most. From property maintenance to tenant relations, from legal compliance to maximizing value. We're your trusted partner through every step. Magnum Properties, Inc., turning property challenges into peace of mind. Call us today at 213-264-4396 or visit magnumprops.com. Okay, so that number three. Now going on

[25:14] to number four. Okay, so strategic pricing, it defines your market position. So, how you price your product or service, it's going to signal to clients and customers the segment of the market that you serve. So if you're if you're pursuing um a a more sort of premium price strategy, so that is signaling to the market that what you're looking for are

[25:49] clients who um who want premium service or they want premium products and you are offering those along with the attendant client and customer support that comes with them. Okay? And the kind of brand loyalty that's expected in that market position. Okay? Whereas if you're if you're pursuing a low price strategy, so you're acknowledging I'm not I'm not suggesting that you know my customers be

[26:26] loyal. All I want is to sell product. Now, by the way, there are companies who compete on pricing, but they also look to uh they they compete on price, I should say, but they also look to deal with the the phenomenon that low prices typically means low customer loyalty. So, an example of that is Costco. So, uh, to shop at Costco, one has to be a member, right? And I'm not a member.

[27:01] I've been to Costco once, I think, in the last, you know, six or seven years. Um, I just don't I don't need to buy products in in the huge quantities that Costco sells, first of all. Um, and there's not one anywhere really close to where I live as well. But what I will say is people I know people who shop at Costco, they are very loyal. Okay. Um, one of their biggest competitors, Walmart where you don't have that kind of membership, uh, you know, to get into the store. I

[27:36] don't think people are as loyal to Walmart as they are to Costco, even though they're pretty much head-to-head competitors. And so Costco has developed a pricing strategy and a marketing strategy, right? That that self- reinforce each other. I think it's one of the reasons why in general Costco has been such a successful business. Okay? So as you look at your pricing strategy, okay, maybe the Costco model is the way to go. Now, by the way, if you look at

[28:11] medical services, you see something kind of similar to Costco, but actually on the higher end. So there are concierge uh medical clinics like one one medical for example where a a patient pays an annual fee to belong to that to belong to the one medical system and then they get what amounts to premium health care in the sense that um you know they're they're they always seem to be able to

[28:47] get you in for an appointment or such. The reason I know that is I for for several years the doctor I saw uh worked with worked at one medical and and it it was actually a pretty great system and the fact of the matter is the annual fee I had to pay was worth it for the peace of mind of knowing that I I was always able to get in and get the health care that I needed and not have to go to urgent care. Okay. So, um, again, your pricing strategy ends up determining your market

[29:23] position, especially as you go from industry to industry, right? And so, um, so if you're going to compete on price, um, really you're going to need absolute operational excellence in in order to best your competitors and you're going to have to be selling at scale. Okay. So, um if you're making just a a few pennies on each product you sell, like the way it is for most grocery products. So, the only way really to build a a viable business is to sell just huge huge volume, right? Because that's you

[30:00] need to do that in order to cover the overhead that every business has as well as generate profits. Okay. um if you're going to um compete on value. Okay, so that requires differentiation and brand and brand strength, right? And so those are those are just two other pricing strategies aside from say the Costco one. And which one best works for your business, right? So, uh you know, it's it's interesting. I've

[30:35] never heard of a plumber following the Costco model, but I I don't know. I think something like that might be worth considering because I think for most of us when we need a plumber, we need a plumber, right? Um and and uh you know to to sort of be part of of a network or maybe it's a network of you know a plumber, electrician, whatever. And so if you know you if you call this number, since you're a member, somebody's always going to be able to be dispatched out to you quickly. Something like that might allow for premium pricing because now

[31:13] you're not you're not competing strictly on price. You're you're competing on quality of service, uh um how quickly one can get a problem taken care of, etc., etc. So something like that may work. And you know you you you may be able to deal in larger more complex product projects which maybe uh are are uh generate you know more more profit or something like that. So I think we need to get creative in looking at pricing strategies no matter what our business is uh and see what really where do we

[31:51] want to be in the marketplace and what pricing strategy will help put us there. Okay. And then finally, um, raising products, I'm sorry, raising prices can improve your product or your service and your business. Okay? So, higher product, higher prices mean the business has more income and so it can afford to offer it can afford to hire better people. Uh, it can afford to train them better. It can afford to give give better service, hold

[32:27] their employees to a higher standard, and it can afford to create and sell better products. Okay? So, I'll give you an example. These days, I buy almost all of my uh products, all of my fruits and vegetables at a at a local farmers market as opposed to the grocery store. And one of the things I've noticed is it tastes a lot better. Like celery actually has a taste and you know, remarkable. Right now it costs me more than what I pay at the grocery store and

[33:02] I have to make a special trip each Sunday to the farmers market. Having said that, I get a better overall experience, okay? Because there a bunch of people there. We're all looking, you know, for the best tomatoes or the best squash or whatever. Uh and so that experience is enjoyable. Number one. Number two, the people who are there, they typically are working for the growers themselves because it's each farm that's bringing its produce to the market. And in many cases, the the people who are working the booth, at

[33:37] least some of them actually, you know, are the farmer him farmers themselves or, you know, like the children or whatever. And so uh you get a better customer service experience and you get people who really know you know what is what is a good quality you know stock of broccoli or something like that. Okay. And to boot you get a better product because it hasn't been sitting in the you know refrigerator for you know a large grocery store where flavor is lost. It

[34:13] hasn't traveled over long distances. It hasn't, you know, come from South America or, you know, overseas from somewhere else. It's all locally grown and and it was, you know, picked within a a day or so of when you're actually buying it, right? And so, and and the fact that the farmers at the farmers market get higher prices, that's what allows them to offer that higher quality produce, right? And so uh there are I can tell you because I like I said I go every Sunday there are lots and lots of people who are willing to pay

[34:49] what amounts to I would say anywhere from 10 to 25% more for their fruits and vegetables uh in order to get what we view as a better product and a better experience. Okay. And you know I I think most of these uh farmers well not most of them but a lot of them they grow organic which is another aspect of it. And I think most of them a lot of what they grow goes is sold at farmers markets and it's sold to restaurants who uh you know want to have you know fresh

[35:26] produce because it it allows them to create you know better better food and and sort of again position their restaurant uh in a more premium way. Okay. So higher prices they they benefit not just your company but they benefit your customers as well. We tend to think of well if they have to pay more that's a detriment to them but it it it depends on really what what the customers and clients want. Okay. So um in the end

[36:01] strategic price increases they can help you reposition the brand of your company and increase its long-term profitability. And so for the the stability of of your business and its future prospects. Okay. oftentimes if if if you are currently competing on price, oftentimes the best strategy is to start building toward a more premiumbumpiced model so that you have a business that will be more sustainable going on into

[36:38] the future. Okay. Now, I want to because I mentioned this at the beginning, I think the same is true if you're an employee employee. So, whatever you need to do to get out of competing on the price for your labor, okay? Notwithstanding things like minimum wage laws and such. Okay. The the the bottom line is we need to improve our knowledge, skills, and experience so that we are a valuable commodity in the labor market. Okay? I know people

[37:13] some people don't like those kind of terms because we're talking about people, but let's let's just, you know, talkless as we say in Yiddish. Let's let's get down to the essence, okay? As an employee, we're selling our labor. We're selling the time that we have to work and we're selling the the knowledge, skills, and experience that we have that can help run the company, help sell its products, help manufacture its products, market its products, whatever it is that we do. The more we can build our our knowledge,

[37:48] skills, and experience, the higher we can the higher we can price our labor. And by the way, we can build a personal brand. I've t I've talked I talked about this earlier this year. Okay? So writing, we can write articles. We can be involved in in trade and professional associations, become a known a known person in our industry. Okay? And that can also help us achieve premium pricing for our own labor. Okay? and and that is a a better long-term

[38:24] strategy than kind of resting on our laurels and continually having to compete on price because you know there are always going to be people who who will seek to undercut undercut you on the cost of their labor. Okay, even in the face of things like minimum wage laws. Okay. So, um, pricing really isn't just a number, okay? It really is one of the most important strategic decisions you'll make for your

[38:59] business and for yourself. It it it will in the end, it's going to determine the long-term viability of your career if you're an employee or of your business if you're a business owner. And so I encourage you to thoughtfully engage in some experimentation to see where your optimal pricing needs to be or can be relative to your position in the market and how that can help you

[39:35] uh get the resources that you need to keep enhancing your business, keep dealing with technological changes like AI become more efficient while still delivering excellent products and services. Okay, so I thank you very much for joining me today. Uh let's see uh full just real quickly reviewing all all my shows on all these are uh Pacific time 10 a.m. Monday trust in estates weekly 10 a.m. Tuesday uh business

[40:10] lessons from the military 10:00 a.m. Wednesday people making money 5:00 p.m. Every other Thursday is Jiggers's place where we have a cocktail and a schmoo and talk about non-financial aspects of our life. And so if you have comments, questions, criticisms, uh um social media links and my email address will be in the show notes. You can find my shows on uh YouTube, Apple Podcast, and Spotify. And if you know someone who may

[40:47] benefit from uh one of my shows, I'd really appreciate if you'd you'd pass along a link to the show and I'd love to have the opportunity to gain them as a subscriber. So, thanks again for joining me uh today. Wishing you a wonderful rest of the day and signing off as I always do. Marie darling, you're my bell.