An American expatriate living in Singapore accidentally locked his safe with the combination formula inside. He called the local professional locksmith for emergency assistance as there is an important document he needs for a meeting. After fiddling for about 30 minutes, the locksmith managed to open the safe. He told the owner it will cost him $3000. The owner argued it is only 30 minutes of work and he refused to pay. The locksmith then locked up the safe again and packed up to leave. The owner begged the locksmith to reopen the safe and this time paid him in advance.
Now, this is value.
The value is what your customer believes the product or service is worth to them.
There are various pricing strategies available, such as Price Skimming, Cost Plus, Psychology Pricing, Bundling Pricing, Pricing against Competition, Product Life Cycle, Supply and Demand Pricing and Market Penetration Pricing. Which to use depends on management strategy and market forces.
We do encounter this question, “Why are Auolive skincare products priced on the high side?” Setting your product price is always a tricky situation and there is no magical formula to it.
Here, I will share the basis for Auolive skincare product pricing.
Pricing is not simply the cost of goods plus your mark-up. It is about the value you provide to your customer. The value can be intrinsic or extrinsic. When the product helps to solve a pain like saving time and simple to use, it is worth more than an ordinary product. Owning a Birkin bag will set you back by over $20,000. While another leather bag may only cost you $200! Yet there is a long waiting time for the Birkin bag. Hence your decision to purchase depends on what is value to you.
Look at the value you can provide your customers. The higher the value, the higher you can set the price.
At Auolive, the benefits we provide to our busy, time-strapped, multi-tasking female customers are soft, dewy and bright glowing skin achieved with just a daily 2-minute skincare regimen. Many women today do not have much time and are rushing especially in the mornings and may skip applying skincare products altogether. Hence they value time saving and product efficacy.
We go to great lengths to find out from women what they really want in regard to their skincare and we spent over. 2 years on Research & Development to launch 4 multi-functional and effective products.
We also invested in having our skincare products Dermatologically and Clinically tested to ensure it is safe for use by our valuable customers. The independent, 3rd-party laboratory who conducted the tests for Auolive also conduct tests for other international skincare brands. Auolive products were also consumer-tested by 30 women of different ages.
We’re also fussy with product texture because we noticed that really matters to our customers when we were conducting product testing surveys! They commonly demand products to be lightweight and absorb quickly. When it comes to Auolive’s product development, not only must the product work well, it needs to meet our customers’ requirements. The Auolive Day Glower, an antioxidant brightening day cream is a great example- despite having UVA and UVB protection, the day cream absorbs like a dream and is not sticky, even when you’re outdoors
The airless pump technology from South Korea is another value add for our busy travelling customers. The airless pump bottle prevents contamination, leakages, wastage and spills – perfect for travelling.
Anti-ageing ingredients can age quickly in a normal bottle/jar. Hence Auolive uses airless pump bottles, which prevents the ingredients from being exposed to air, thereby delivering maximum performance of the ingredients.
Convenience will always cost more for the products. Just check out the pricing of similar fast moving consumer goods from convenience stores versus supermarkets. The price difference for the same products will surprise you.
When you have a skin care product that is effective, yet can save you time and is easy and convenient to use, it will cost you a bit more but it is worth every cent as time once lost can never be recovered.
Another consideration when setting pricing is the quality of your raw ingredients. Good quality ingredients are worth its salt. Just visit a high-quality restaurant that uses top grade ingredients in their cooking to find out their pricing strategy.
Only the best natural ingredients are used for Auolive products. Good quality ingredients will cost more but it is worth the investment as we value customers who will benefit from the efficacy of the products.
Take for example the Night Booster, which is a Collagen Restorative Moisturiser. It contains 80% Marine Collagen- this is a very high concentration for an active ingredient because in general, the active ingredients percentage for skincare products, in general, can range from less than 1% to 5%.
Additionally, the Marine Collagen’s highly purified state and low molecular weight enables the Night Booster to penetrate easily into the skin to nourish and stimulate collagen production.
Auolive also has its own proprietary ingredients. Example our Eyes Lifter, which is an Invigorating Eye Serum, contains the ingredient CellActivator- a multi-tasking powerhouse ingredient that detoxifies cells, is intensely hydrating, and increases cellular energy and renewal, hence reducing skin ageing. In clinical studies, 95% of women agreed their skin were more toned and smoothened, with blurred lines and wrinkles. Knowing your target audience, their spending power and lifestyle is a critical approach to pricing strategy. A BMW car versus Hyundai car price is a wide margin of difference even though both cars can bring you from point A to point B. A Rolex watch versus a Casio watch or a Chanel dress versus a Mango dress. Get the point?
Therefore, there is no magic formula to pricing strategy. It is about the value that customers see and benefit from. What benefits can you offer your customers? What problem can the product solve? How will you simplify the use or application of the product?
In fact, Auolive skin care products’ cost is lower than many known brands because besides providing simple usage and saving time, it is multi-functional. Take the Auolive Day Glower - it is an Antioxidant Brightening Moisturiser, packed with antioxidants, brightening, anti-ageing, and sun protection properties, plus it doubles up as a good primer.
So Auolive pricing is really not high as you only need to buy one bottle of Auolive Day Glower at $118 instead of buying 3-5 products to provide all the similar functions and paying $300-$400. You spend 1 minute applying the “all-in-one “product versus more time applying different products. As the saying goes, “Save time and save money!”