Secrets To Pricing Strategies

If you sell a product or service, one of the key things that you need to consider is the price you ask customers to pay. But most businesses have to decide how to price their goods or service and whether it will be lower, the same as, or higher than their direct competitors.

1. What's In A Price?

The price you set your goods or services at can make or break your business. For example, you could sell one million units of a particular product and not make a penny in profit because your shipping costs were too high, etc. A low price, staggeringly, can sometimes drive away customers because, as the saying goes, you get what you pay for. Customers sometimes won't mind paying more for a product if they know that money results in a big improvement in quality.

2. Value Packing

Many retailers today offer the exact same products as one another. Worse yet, they all have price guarantees in some form or another, meaning that over the next month if the price goes down from any retailer customers can get some money back. So what can you do when your competition is selling the exact same product for the exact same price? The only option you have is to pack value onto the item. Sell your customers not on the product itself but on things that add value to their purchase, like an exemplary return policy or a free extended warranty. Many retailers offer free camera cases for digital cameras sold, for example.

3. Price Isn't Important

Most people are willing to be lenient on the price. Chances are, if someone needs something they will pay for it even if it costs them more than they wanted to spend. Of course, you shouldn't take advantage of people in this way by price gouging them. It's important to test to see at what point people will pay, at at what price point people are no longer interested in what you have to offer.

4. The Essentials Of Pricing

First and foremost, pricing needs to be easy to understand. If the price you advertise is after a mail-in rebate, or only through a specific promotion, or only when you buy something else first, or only when you buy three or more, then you have a problem right from the get go. Worse still, if your product requires other products to be able to operate, and you don't mention this, you can get customers quite angry.

The most important thing to keep in mind when your deciding on a price point for your product/service is to test, test, test. You'll never know until you try. It's wise to test at a higher amount first, because customers always love it when you bring the price down, but you might make them angry if you try it low first and then raise the price.