Monetization Playbook #63 —The Perception Dimensions of Monetization
The Perception Dimensions of Monetization
Perception is a reality in life and the view of your product or service. How a customer views your product shapes everything.
How does the customer view your product or service?
partner or hire
premium or economy
contextual or non-contextual
We have used the term hire rather than worker but view them as the same for this purpose.
Beyond the contextual layer, which has the overriding sway {e.g., the view of a product has a very different outlook during a recession in a war-torn country, etc.}, we delve into the intersections.
The intersection of partner and premium pricing = brand.
This go-to theoretical positioning for many new businesses is not easily achieved and requires more than just marketing and advertising spend to execute successfully.
The intersection of partner and economy pricing = disruption.
A new market player offers an improved product that nails the jobs brief but at a much lower price.
It may be because they have a radically improved business model than the usual incumbents - think back to when Netflix DVD delivery.
The intersection of Hire and economy pricing = competition.
Everybody sees the product utility precisely as it is, no malice, no mercy. Does it do the job or not, and how many players in the same ocean can do it.
The intersection of Hire and Premium = compliance/pain relief.
Everybody sees the product as a utility but one that comes with a premium.
There are higher entry barriers into this pool, thus demanding higher returns but no passion for the user's service. e.g., tax return accountants or dentists.
So let's explore the dimensions…
Partner/co-creator/alliance
The customer/client/consumer viewed your product or service as a partner or co-creator to achieve their desired outcomes. This relationship's psychology leads to the charge viewed as price (of success) rather than cost.
An example within professional services illustrates this point.
A strategic transformation project would be viewed in partnership/co-creator terms, whereas an audit by the same firm is considered an employee/contractor task basis.
Partners/Co-Creators compensation is often viewed as a share or equity distribution, thus denoting a return on investment.
Employee/contractor/hire
The customer/client/consumer views your product or service as being employed or hired to carry out a task or series of tasks.
The job itself doesn't meet the overall desired outcome.
Therefore the relationship is a cost rather than an intrinsically valuable cog in the whole machine.
It would be crazy to suggest that a rational firm hire a new employee to reduce revenue or increase customer churn.
However, 99% of enterprises refer to an individual's salary as a staff cost, not an investment in human capital.
Cost Base, Zero Base Costing, Cost Budgeting. The lexicon of business employees is that of a cost, not an investment. The set anchor dictates the interaction.
Price is what you pay;
Value is what you get.
Warren Buffett
Price is a signal
Your price is a signal. It could be signalling prestige, or scarcity, excess supply, or increased demand.
In a world of disparate data and knowledge, your price acts as an agent to bring an understanding of your offer and how the market should view it.
Your price is the genesis of your language and communication with the outside world. It’s the currency of value exchange.
Regardless of whether your price is high or low, the signal needs to be legible and understood.
Sipping cocktails on a beach
Imagine you're sunbathing on a beach. A friend offers to buy you a cocktail. There is a shack bar on the beach and an equidistant swanky hotel.
Your friend indicates that both serve the same Pisco Sour, made to a well-known local recipe. One charges $20, the other $8.
Which one do you choose? Have you already ascribed the $20 price to the expensive hotel?
Your choice will be dictated by:
who you are (status),
why you're buying (not just for thirst!),
how you're charged (cash vs. credit),
what you rationalize as fair (experience),
when you're buying (sundown?), and
where you are (paradise).
Context dictates the value, and value dictates the context!