Take a look at The Poisoned Pen (www.poisonedpen.com/), a small independent bookstore located in Scottsdale, Arizona. Their motto is “It’s more than a bookstore, it’s an experience.” Look around their website. Read the blog by Barbara, the owner. See what authors are scheduled to appear and sign their books. Check out their pricing. Experience the store, in light of its motto. Discuss The Poisoned Pen’s approach to pricing. How are they able to remain competitive against booksellers such as Amazon.com or Barnes & Noble?
SOLUTION
After spending some time looking around the website of The Poisoned Pen, it becomes evident that they are certainly not a discount pricing operation. In an industry where it has become normal to find newly released hardback books at 25 percent to 50 percent off of the manufacturer’s suggested price, The Poisoned Pen does not discount. But, for their customers, this pricing strategy is a bargain. The Poisoned Pen uses a value-based pricing approach. The prices of their products are set not on what the product costs them, but, rather, on the buyer’s perception of value. Their approach is definitely value-added. They provide a high level of personalized service to their clients, keeping track of what they have previously purchased and making suggestions on what else they may be interested in. Your personal information is kept on file with them allowing a customer to simply call them up and say, “Hi, this is Mike. Would you please send me the new Cussler book”? Additionally, they specialize in signed first editions. This high level of personalized service combined with author signed editions of books is what ensures they are capable of providing high value to their customers. This is value-added pricing at its best.