Is there anything offered for sale these days that is not on sale? Clearly, the consumer of all products and services has gone from wanting a deal to expecting one.

Born from a shrinking economy and a lingering crisis of confidence, the temptation and reality of dropping price is on the table regardless of product or service.

The search for a price was brought from global to local this week as the Wall Street Journal detailed a sharp decline in the luxury wine market.  Jim Carlton writes that “recession-weary consumers are buying more mid and low-priced wines, causing a sharp falloff in sales of wines priced at $25 and higher.”

From airline seats to bottles of wine, the impact of price change is a topic of interest for any business or company seeking success or survival in difficult economic times. Jumping to the conclusion that price, and price alone, will stimulate sales may or may not hold water.

An examination of the cost components to your business product may prove effective before tinkering with price. Certainly a layman’s observation, but there seems to be a long history of suppliers, vendors and providers sharing in the retailers’ profits in good times and pressed equally to make price concessions in bad.

Having exhausted a critical effort to reduce costs of production, an examination of methods of product delivery and marketing may also prove fruitful before adjusting price. In the wine industry many wineries are opting to contact their consumers directly, bypassing expensive distribution networks.

Adjusting the price of your product should be approached cautiously, as in any economy you can hurt your brand and affect long term sales. Aptly quoted by Elliot Stern of Sorting Table of the Napa Valley, “If you’re a $90 wine and all of a sudden you’re on the Internet at $50, how do you ever become a $90 wine again?”

This observation is hardly limited to wine. In professional service business such as health,  law, real estate or accounting, joining in a price war by reducing fees may be a strategy producing little short, term success and considerable long, term damage.

Because consumers often believe price to be the equivalent of value, they are willing to pay for value, or perceived value, even in a down economy. A close look at the “price sensitivity” of your product to the consumer is critical before making price adjustments; price may not matter in the consumer’s decision to buy or not to buy.

Alternate strategies to pricing can include redefining your product or service in a different way to benefit the consumer or add to service with consulting, consumer support or guarantees that raise value but do not add expense. 

In selecting a market strategy and conversing with clients, deal with price last. Focus on value, benefit and investment when it comes to customer dollars. To adjust the price of your product may be the first thing you think about and the last thing you want to do.

Charles Bogue is a real estate broker in Napa. He can be reached at 486-5511 or e-mail: cbnapa@napanet.net