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Secrets to Pricing Strategies
by Edward Bryce
Published on this site: October 10th, 2006 - See
more articles from this month
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.
- 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.
- 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.
- 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.
- 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.
Edward Bryce: For more great pricing related articles and resources
check out http://businessplanplace.info
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