When it comes down to it, pricing is about marketing. It’s about how you position yourself in front of your audience and what you ask from them. Your price is determined by several factors, including the value you provide to their needs, how well you position yourself as an expert in the field, and whether or not there are cheaper alternatives out there.
Just because something is priced lower than another similar product doesn’t mean it’s necessarily the better deal. In fact, in some cases it can be quite expensive if the features included with the higher-priced version are too much for you or the buyer.
By having a clear understanding of why your current pricing structure is effective and how you can tweak it to fit your business more closely, you will improve your overall market performance.
This article will go into detail on some ways that you can apply pricing strategies to help achieve different marketing objectives, such as increasing sales, creating word of mouth evangelists, or improving your image.
The second major component of your pricing strategy is creating a pricing structure or model. This includes deciding what products you will offer, how much each product costs, and when those prices are set!
You can choose to have fixed price items or discounts depending on the season or times of the year. For example, if your business offers yoga classes, you might want to hold off on lowering your prices during the winter months because people may not be able to attend classes then.
Alternatively, you could discount the classes in April so that people can refresh their skills before the busy summer season begins.
You can also add new products to your collection as time goes by which will change how expensive or cheap your overall offering is.
The second way to test the strength of your price is to test it. Simply put, you want to determine if your current prices are too high or not low enough!
This is one of the most important things you can do as an entrepreneur because you will be asking yourself this question every time you launch or re-launch Your Business.
You will also be asked this by potential customers all the time!
It’s like when people ask me about my business and what I offer, so they can decide if they want to work with me or not. My response has always been that I have the best product in the world, and I hope people realize how good that product is before they come work with me or buy my products.
The thing is though, I know what my offering costs, and I’m honest about it. I don’t try to sell something for less than it cost me to make it because I believe that would go against everything that I stand for as a person and as an entrepreneur.
So why should you be more expensive than you need to be? Because you want to be sure that people feel that value of yours matches up with how much you ask for it.
A growing number of businesses no longer rely on advertisements as their main source of marketing information. Companies have created applications and services that monitor all sorts of data about you, from browsing histories to smartphone activity to in-app purchases. These so-called “big data” tools allow marketers to draw conclusions about who your customers are, what they want, and how much value you provide them.
With this sort of insight, it becomes possible to determine not just whether someone will buy from you, but also why. By looking at all these different pieces of data, we can begin to understand how pricing strategies influence the market position and success of your business.
Here, we'll take a look at three important reasons why understanding customer price sensitivity is essential to staying competitive.
As we mentioned before, pricing is a very important part of marketing your business or product. However, it is one of the most overlooked parts of the process!
This is quite the feat, considering that you will probably have several prices for your products and services throughout your life as an entrepreneur.
You’ll start off with having a free trial offer (that eventually ends when you are no longer willing to provide your service at zero cost), then paid plans, and potentially even discount offers in-store and online. Some companies only offer their most expensive plan as a special deal, so they don’t really have a regular price.
But all of these different types of pricing are linked together, and none of them can be ignored.
A few months back, I read an article about how business owners spend way too much time defining their market and objective of the company before deciding on pricing. The writer mentioned that you should only worry about price after you know what you want your product or service to do and who it will target.
I agree with this theory. Before you pick your prices, make sure you have done some research and determined if there is a need for your product or not, and whether your competitors are meeting that need.
After you have those basics down, then you can start figuring out how to position yourself in the marketplace and what prices would be effective for your business.
Another way to look at this is that pricing is how you market yourself or your product/service. If you are marketing yourself as the best doctor in the area, then what people will think of you is important.
If they think you are too expensive, then they may choose someone else instead. Or maybe there’s no need for them to hire you because there’s another one down the street who can do the same thing for less money.
Conversely, if people like you and want to be seen by you, then they will spend more money with you. By having these assumptions about you, they influence your price.
Your price also influences their perception of your competitor’s prices. For example, if your competitors’ prices seem almost irrelevant compared to yours, then people will assume that they don’t care about their customers very much.
This could make them come back to you since it seems like you care more. On the other hand, if everyone has the same low price, then people might compare you to see which one they should go with.
A little-known, but very important part of pricing is determining who your market is! This is an easy way to put a nail in the coffin of being labeled as having “too high” or even “overpriced” services or products.
By defining your target audience, you begin to create content that is more targeted and relevant. Your marketing messages will be clearly understood by people actually in this market segment — not just someone watching your advertisements with no connection to you or the product/service you offer.
Your target market can change so make sure to keep up-to-date on what industries your service or product fits into. For example, if your business offers accounting services, then it makes sense to focus on small businesses in the same field.
Alternatively, if you are offering personal training services, then potential clients come from all walks of life – therefore, targeting individuals coming off a busy work day is another good option.
If you are still feeling overwhelmed after doing some research, try looking at testimonials and reviews for your services to get a better picture of who your customers are.
When it comes down to it, you will be spending most of your time talking about pricing in relation to marketing objectives. This can get confusing because there are so many different types of prices that exist.
It is important to know what your competitors are offering and how well they are doing this. You can do this by looking at their advertisements, speaking with people who have business relationships with them, and reading reviews online and off.
By having knowledge of your competition, you will know if their price points make sense and whether or not they are over- or underpriced. You also want to look at their return on investment (ROI) and profitability to see if these things change seasonally or if they remain consistent throughout the year.
When it comes to setting your own prices, remember that customers will always compare you to other similar products.