Setting the right prices for your products and services would make a huge difference to your profits and turnover. This is, however, one of those things that are easier said than done. Setting a price that’s too low could make consumers assume that what you’re offering is subpar even if it’s not while setting it too high could make consumers go to your competitors. That said, below are some pricing strategies to consider.
This strategy is particularly useful if you’re rolling out a new service or product. While you might need to sacrifice profits at first, you could quickly seize your share of the market and discourage your competitors from penetrating it. Discount pricing is also practical for encouraging consumers to book in advance or sell perishable stock quickly.
Consumers are more likely to associate a high price with a high-quality product or service. And while premium pricing would lower your turnover at first, it would be offset by higher profit margins. If you find that this pricing strategy doesn’t work, you could always reduce your price to something that’s more competitive. This pricing strategy is usually effective if you have barriers to competition, such as if you already have a loyal client base or a patent for your service or product. This could also work for small businesses that lack the resources to compete on prices but could offer value, via outstanding customer service for instance.
Evaluating how your offerings compare to your competitors’, as well as the value that your target marketplace on the benefits and features you could provide, would offer you a clearer idea of how you should price your products or services. Consider using competitor monitoring software to learn crucial info about your competitors and set your prices similar to theirs, without sacrificing your bottom line. This way, your target market won’t discount your offerings immediately because of their competitive prices.
Pricing Strategy for a Range of Services or Products
When pricing a range of services or products that you offer, your goal is to remain consistent so that your customers would feel that your entire range has value. For instance, if you have a restaurant, you could set similar markups across your menu and include minor price increases or reductions to reflect the individual items’ perceived value.
Probably the worst thing you could is just “wing it” when pricing your products or services, but many businesses sadly make fall into this trap again and again. To avoid falling into this trap and ensure that your business remains competitive and lucrative, do your research, experiment, monitor the results, and if you see that a pricing strategy is not working for you, consider other strategies until you find one that works for you.