How Much Are Your Bananas? – An Experience-Based, Pricing Model Case Study

John Vachalek - 9.14.2009 7:17 AM

Whether you are selling bananas, professional services, or manufactured goods, the client experience you create dictates the price that you can charge and your overall level of client satisfaction

About a year or so ago, on my semi-daily visit to Starbucks, I noticed that they started selling bananas.  The cost was .90 each. This seemed pricey especially since bananas are available at every grocery store for quite a bit less. I began to notice that some mornings there were no bananas. When I asked why, they told me that on many of days, the bananas sell out early.

Starbucks also has cafés in many grocery stores in the Denver Metro area. The Starbucks in the Safeway near my office has a café, which also sells bananas. These bananas are .50 each. This is a savings of about 45%.  Curiously, they also sell bananas at this Safeway for .59 per pound, which translates to .22 per banana.

Starbucks does not promote any special qualities inherent in their bananas. They are not organic, they do not come which any special packaging, they do not promote that the proceeds help support any special cause, they are just simply bananas.

So, why would people pay .90 for a banana at Starbucks instead of grabbing one from home for only .22? The answer is that people ARE willing to pay more for a better experience.

Buying a banana at Starbucks provides people with:

• Greater convenience
• The Coffee House atmosphere
• The enjoyment of chatting with people
• The feeling of doing something special for themselves
• The feeling of supporting a business which has become a part of their lives

How to use this information

Ask yourself, “What could I do in my business to enhance my overall client experience so that my clients are happy to pay .90 for my bananas?” This is a price difference of 400%+ over the standard going rate for this product. What if you could charge just 100% more and make your clients happier?

When answering the question about what you could do, be careful to focus on the experience and not your product attributes. Typically, people begin looking at their years of experience, the good job they do and the value that their product provides. But, a banana, is a banana, is a banana.

You must, focus on how you can reinvent the delivery of your product through the creation of truly unique experiences to achieve this goal. This is not easy. The more unique and relevant these experiences, the more money people will be willing to pay, the happier your clients will be, the more word of mouth referrals you will receive and the more loyal to your clients will become.

To read an interesting discussion about the bananas at Starbucks from some of their patrons visit VeggieBoards.com

Webolutions helps our clients analyze the impact or lack thereof of their current client experiences and works with them to develop truly unique, branded and high-impact experiences.  This allows them to stand out in the marketplace and enjoy the benefits of using effective experience marketing to their advantage. For a free initial consultation, contact us at 1-800-657-6055.

Please feel free to submit your comments, experiences or input to this blog post below.

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