The question of what to price wares at is far from trivial, and not just because of profit considerations. The prices you set for products and services go a long way in determining how customers engage with your business. Though advertising and promotions draw eyes to your brand, pricing strategies and the quality of your products and services are the main metric by which potential customers act. With some insight, though, you can use this to your advantage. Here are some tips on implementing pricing strategies to work in your favor.
Do Your Research
Market research is vital in discerning how customers have responded to goods, prices and promotions—from there, business owners can forecast the likely results of particular pricing strategies. Many tools now exist for price analysis based on market trends, but getting the basic research in first is also important. Broadly, research can be classified as primary research conducted personally, such as surveys or focus groups, or secondary research gathered from other sources. To most closely match with the behaviors of your potential customers, you should focus on research regarding products or services similar to yours.
Consider Pricing Objectives
The pricing strategy you opt for should be based on a particular objective that you have in mind. Pricing objectives reflect short- or long-term market goals—for example, maximizing profits or revenue, entering a new market, releasing a new product, establishing a brand image or cutting losses in a market decline. Determining these objectives is necessary in order to select a pricing strategy that facilitates it. Keep in mind that pricing objectives change depending on current market demand, production costs, competition and more; the strategies with which you approach pricing should change in turn. Also, businesses rarely stick to a single strategy across their entire suite of products.
Making Use of Discounts
Discounts stand out to your potential customers, especially those that are already loyal to the brand. While it may run contrary to the profit margin, smart use of discounts can improve sales volume, get customers to consider items they otherwise wouldn’t buy and act as a reward for repeat customers to encourage further purchases. Consider the product or service you’re selling, as well as market trends, to decide on what type of discount is appropriate. For example, package deals or bulk discounts can convince customers to purchase additional goods, while seasonal discounts can buoy sales in off-seasons.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.