Recently I posted a note on Principa’s Facebook page in which I strongly recommended a book called The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. This book is arguably the best book I have ever read that details the real life challenges that every business has in getting established and growing to a substantial size. It’s a biographical journey detailing the building of the wine brand Barefoot by two people who got into the business by accident simply to help a client recover a chunk of money that was owed to him and their only knowledge of wine when they started was it was something you drank.
The entrepreneurial lessons in this book are simply amazing and anyone who is in business or planning to launch a business would do well to read it with a notebook in hand because there are lessons on every page. It is a story how you can make something out of nothing. Some of the things they did was sheer genius, other accomplishments were the result of tenacious hard work. Scattered throughout the bokk are some amusing anecdotes with a strong lesson as well.
One of those lessons involved a pricing strategy that’s worth sharing.
One of the founders of Barefoot, Michael Houlihan, was accompanying his rep for New Jersey and they were visiting a town in the Atlantic Highlands. Michael had learned from experience that every business was a little bit different and created its own style. In this case he described the town they were visiting as one that “seemed to be living in the 1950’s.”
The store they were calling on had butcher’s paper signs in the windows with huge lettering that read “3.99”, “4.99”, in six foot tall numbers! The signs said nothing else – just the price and they literally covered the windows. The owner of the store was a guy named Abe. He was somewhere in his 60s with a craggy face, rumpled clothes, and the posture of a question mark. He had a cigarette in his hand, another burning in an ashtray…. do you get the picture?
Michael asked Abe “What’s with the $3.99 in the window? Abe told him ” … you have to qualify the customer. They see the price, they get a warm feeling. They know they can afford something in the store.”
“But” Michael said “it doesn’t say what’s $3.99”
“Doesn’t need to” said Abe. “Look around whaddaya see? Those are big prices. Not high prices, big prices. Makes customers feel good, makes ’em think everything is on sale. See that wine there” said Abe. “Last week, it was selling for $5.99, but I had a small sign. This week, it’s got a big sign, and it’s $8.99, and you know what? I’m selling twice as much.”
Maybe when you send your next bill out to your clients you should do it on 6 foot sheets of butcher’s paper. Or maybe you should share this idea with your retail clients. More importantly you should read the book and after you’ve done that give it to some of your clients.