Many business owners believe that low prices increase demand. Then how do you explain this announcement in Torque News, GM Raises 2014 Chevrolet Corvette Stingray Pricing to Ease Demand?
The demand is so great that there’s a year-long waiting list. How can that be? The base price of the 2014 Corvette Stingray is $51,995? While most business leaders lament the ‘fact’ that customers only care about price, GM is experiencing mind-boggling demand at extraordinarily high prices. Is it just luck?
Companies that enjoy premium prices know that, as long as they’re delivering on their brand promise, customers will pay whatever price they ask. They also know that, when experiencing increased demand, limiting supply further enhances the value to the customer.
The natural response to the demand Corvette is enjoying is to ramp up production. After all, you want to make your customers happy, right? The real appeal for Corvette 2014 customers is not owning the car, but owning a car that’s in limited supply.
It’s the same psychology we see at play in the art world. Originals command the highest price, followed by limited edition prints. The smaller the number of prints, the higher the price. Why? Because the limited supply affords bragging rights. It’s much more fun to be able to say that you own 1 of 10 than 1 of 1,000. If a thousand people own what you do, you’re simply one of many. If only 10 people in the world own it, you’re special.
While that may seem tacky to some of you, it’s the reality that exists. If we spend our time judging human nature, we’ll miss opportunities to enrich the lives of others and, in doing so, enrich our lives as well.
If you’re serious about wanting to increase demand for your products and services, raise your prices and limit the supply.