Better pricing is one of the fastest ways to boost sales and profits. It dramatically enhances profitability, which then sets a foundation for business that continues to flourish. The problem, however, is that pricing is difficult to get right.
There is no single formula or process that suits different types of business and products. Pricing an item usually involves considering different factors such as knowing how much competitors are charging, understanding the relationship between price and quality, and considering minimum advertised pricing or MAP policies.
Here are a few strategies to help with the goal of improving pricing:
Express the Value of Product
Let customers know why your product is better than the competition’s. Take extra steps to quantify how and why purchasing your offerings can give them better and more satisfying results. If you think your product is better, explain why and charge more than competitors based on value. If your product has fewer features, however, acknowledge it and justify a lower price.
Offer Pricing Choices
Providing good, better, and best product versions is an effective pricing strategy for most businesses. This is because customers appreciate being offered multiple pricing options rather than a single price and simply just agreeing to it. This strategy helps customers choose how much to shell out and it is good to know how many people often choose the best version.
Constantly re-evaluate your costs to make sure that they are up-to-date and right for your business and the market. You also need to understand the need to restructure or rethink your pricing to increase profitability. Just make sure not to overprice products in an attempt to gain more profit.
End Prices in “9”
A research from the Quantitative Marketing and Economics suggests that prices ending in “9” are so effective that companies using such a strategy are able to outsell lower prices for the same product by 24 percent. This is because the use of “9” alerts customers that an item is at great value and the lowest price available.
Boost profit and growth through better pricing. Avoid overpricing or underpricing products, as it can have a disastrous impact on your bottom line. Experts suggest putting yourself in the customer’s shoes to determine the best price. Keep in mind that consumers want to get what they are paying for based on value.