“The key to abundance is meeting limited circumstances with unlimited thoughts.” – Marianne Williamson, American Author
“Many creative people are finding that creativity doesn’t grow in abundance, it grows from scarcity – the more Lego bricks you have doesn’t mean you’re going to be more creative; you can be very creative with very few Lego bricks.” – Jorgen Vig Knudstorp, Chairman of Lego
A scarcity or abundance mentality can wreak havoc on setting prices for your offers.
I was recently in a conversation about this very topic with a friend who was struggling over how to price a new service offering. On one hand she really wanted to help certain businesses get an online advantage they desperately needed. But that meant pricing it both below market AND below the value of my friend’s experience and skills – and below the actual revenue difference her service would make for these businesses.
Her motivation was one of abundance: 1) offering a service based on unique skills and experience she has; and 2) helping create more revenue for these businesses. Her concern was that these businesses would have a scarcity mentality – which they often do because they’re driven by a short-term view of cash flow, frequently a cycle that’s almost impossible to pull out of.
Turns out pricing benefits from a thoughtful, informed, and methodical approach along with really good marketing to back it up. Letting an abundance or scarcity mentality into the process muddies the waters – both in setting pricing AND in paying a price.
So, what role does an attitude of abundance play in business? Or in pricing? Because it really feels like it’s important in having an offer that feels generous (vs. mean) and abundance affects that equation.
In the larger picture of marketing, pricing plays a particular role in:
- Reflecting the value exchange between customer and business;
- Signaling the positioning of the offer in the market (compared to competitors both perceived and real); and
- Ensuring the value exchange can continue (the business can keep running and the customer can continue to have a reliable source).
Many businesses short circuit this whole process of figuring out the equation and use a cost-plus basis for pricing. This essentially boils down to both spreadsheet work and an attitude of scarcity: simply setting the price so that it covers the cost plus a little profit. That attitude actually hampers creating pricing that reflects the real value that’s exchanged – because it doesn’t include the value the customer experiences in the price.
That scarcity attitude drives the business to price it as low as they can to just cover costs and a small profit. And that scarcity gets signaled to the buyer so that the business ends up being positioned in a less than favorable light – and easily replaced by a competitor. Why? Because the customer will comparison shop using price as the primary measure, rather than additional value they get from the exchange: speedy service, status, a relaxing experience, additional features, a personalized process – to name a few examples.
Getting back to the question: where do abundance and scarcity best fit in this equation?
An experience of abundance
One of the best applications of an abundance mentality creates the experience of great service – an abundance of great service, always available whenever the customer shows up, in person or online. When customers walk away after a purchase feeling like they can count on being treated well, they WILL return. And return customers are the best deal ever – very little acquisition cost for that other than what you roll into the purchase experience to begin with.
The assumption of scarcity
When your business has figured out how to solve a unique problem that people have been putting up with – a gap they’ve adapted to – and you do it well, then you stand out in the market. Your business becomes a scarce resource to be sought out for this special value you offer. Your task is to uncover this particular scarcity and then make sure people hear about your solution. Essentially, your business becomes a scarce resource to your market. That is how scarcity can work well for you.
Misuse of scarcity and abundance mentality
Magical abundance mentality thinking that says something like ‘make it and they will come’. That happens after you do the hard work to identify the value people are searching for and then get the word out about what you offer. This needs to be a labor of love – and if you find the sweet spot, then you’ll have abundance.
Fear-based scarcity about a lack of customers that drives low pricing and an uneven value exchange. Here’s the thing about a lop-sided value equation: it creates tension – customers can feel it and most are going to shy away from that experience.
Thoughts of scarcity or abundance are mindsets that we can use to our benefit. Used wisely and they lead to generous experiences, creativity, and opportunities. They aren’t intrinsically good or bad. Instead, they are part of our toolbox for shifting situations and creating something meaningful out of the resources we have at hand.