A Surprising COVID Lesson In Pricing

“Creativity is about thinking up new things. innovation is about doing new things.”
Theodore Levitt

Not surprisingly our town mandated the use of masks effective last week. Of course I completely forgot, and had to make a mad dash to Target to stock up. Also not surprisingly Target was pretty much sold out of masks. Except for about 10 packets left of “kids masks” - in your choice of coal black or coral pink. Two masks in every packet. $4 a packet. After grabbing three packets of the coral, I headed back out to the car to dispatch them to my not so impressed family. Next stop was to a craft store to buy fabric markers so they could be decorated.

And that got me thinking about pricing strategy and how this can help your business.

Here’s how.

The masks are made in China. I’m sure they cost pennies on the dollar to make - and that includes their packaging, which was a simple cellophane wrapper with a cardboard insert. Here’s where the genius lies of what they did - instead of selling one mask for $2, they just doubled their masks sales by selling two masks for $4. I’m sure they have a ton of research on the right price point for a product like this based off of their bargain bins they have placed at every entryway, so they knew that at $4 it was likely the products would fly off the shelves. But if they tried to sell three masks for $6 or even three masks for $5 then sales would be a lot slower because the $5 mark is a breakage point.

Another brilliant thing Target did with their pricing and packaging (Step 4 and 5 of the Client Stampede Marketing Formula) is that the product is niched - it’s for kids. By niching a product it means you can charge a higher price. And of course the higher price was justified by their clever advertising copy and a special “design feature” that states the mask has a pocket for an air filter.

Are you following how simple yet brilliant this pricing strategy is? Now how can you apply this to your business?