After watching the video “Pricing Strategy at Standard Renewable Energy”

After watching the video “Pricing Strategy at Standard Renewable Energy”, how does John Miggins quote prices for SRE’s solar systems? How does SRE engage in psychological pricing?

John Miggins quotes prices for SRE on per Watt basis which is the unit of Power or the energy consumed for a certain time. The main unit they use to price is Kilo Watt (KW) Hour meaning the energy used in an hour. According to John Miggins, an average home uses 900 KW per month. So SRE sets a renewable energy system for their customers that can produce 900KW a month on average.

There are different aspects to address the psychological issues or consumers. First is that the customers want to know that SRE is going to stay as a company for a long time so that they have less difficulty in the maintenance and repair of their renewable energy sources that are installed by SRE. This is not a part of the pricing but is a fundamental aspect of making a sale.

There are customers who want to save money, so SRE has to make a price calculation and tell them that they might be spending a lot of money at once but in the long run they will be saving money and help protect the environment. According to John Miggins, return on investment is not what the customers should be looking at. Therefore, they have to be convinced for an investment that has financial benefits in the long run.