Chipping Away the “PRICE IS KING” Myth in Home Selling

The way many Realtors and home sellers rely on pricing as a marketing strategy for home selling is not entirely all it is cracked up to be. Believe it or not there is a simple yet profound parallel lesson both Realtor and seller can gain from the way Lay’s potato chips are packaged, priced, marketed and sold and how real estate is packaged, priced, marketed and sold.

First, lets me be clear… when it comes to selling anything, be it real estate or potato chips, price IS king. It is a fact that the selling market will only get the price the buying market is willing to pay… this is what makes price “KING”. However, I think that too many agents and sellers collapse the concept of “KING” down to mean it is the ONLY thing that matters when it comes to selling real estate. They don’t understand the total ramifications of HOW pricing is but one factor managed and integrated into the overall marketing and selling process of real estate.

With that in mind, let’s crunch on the pricing lesson of the potato chip…

Recently I saw a persuasive news segment on CBS Sunday Morning. In the piece the correspondent reported on the dynamic and well-regulated world of food labels. Interviewed for the segment was the Product Manager at FritoLay that was responsible for marketing their “natural” potato chip product. FritoLay knows that while Classic Lay’s Potato Chips (Bet’cha can’t eat just one!) have been a snack “staple” in America for years, consumer tastes change. Because markets and tastes change, FritoLay knows they must ongoingly develop products”¦ including potato chip products.

Surprisingly on camera, the FritoLay’s marketing manger shared a company “secret” about one of their newer products… the Natural Potato Chip. She revealed that Lay’s Natural Chips are for the most part exactly same product as Lay’s Classic Chips. BOTH are nutritionally the same product and are made using the same type of potato and are cooked in the same way. The only real difference, between the two, is that “natural” chips are salted with sea salt, a salt PERCEIVED to be more natural, are cut thicker and are put in bag that looks more earthy in color and has a matte (paper bag like) finish. Classic Chips go into a shiny red and yellow bag.

Ok, so what! Both bags of chips are the same. What’s does that have to do with price?

Well, there is one other BIG difference between Lay’s Natural and Classic chips. FritoLay admitted that they put LESS chips in the Natural chip bag AND the then charge MORE for them. That’s right, less product for MORE money. So if price really is KING, how could they get away with this? Well, FritoLay’s knows that buyers buy what they want…some potato chip consumers want “natural” chips. Buyers do not perceive Classic Chips as natural… even though they really are. If FritoLay wants to sell chips to the “natural” buyer, they have to sell a product that is viewed as “natural” they know he packaging then becomes essential in driving home the “natural” point.

So even though these chips are basically the same, because the potato chips are packaged in a way that buyers can easily and visually relate to them… they buy them. FritoLay knows that buyers buy products, as simple as potato chips, when they connect to it.

Or said another way… even though homes are often the similar, when homes are packaged (staged) in a way buyers can easily and visually relate to them… they buy them. Stagers know that buyers buy products, as COMPLEX as a home, when they can connect to it. A real estate stager’s job is to package a house in a way that the buyer will relate to. In a chip, THAT is what staging is all about.

So, while it is important for a home/listing be priced right, don’t be misguided into solely believing the “Price is King” myth”¦ if you do then your home/listing may just end up sitting there on the market as a Real Estate Couch Potato.

Chip It Forward…
Me

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