Smart Pricing Strategies For Entrepreneurs
Effective pricing can be a difficult thing to ascertain. While you want to offer a great rate to your clients, you also want to make sure you are covering your costs. And then you have competitors to think about. Here are some smart pricing strategies for entrepreneurs and businesses alike.
An introductory offer is a great way to get your clients to try before they buy. It could be an offer of something for free or a heavily discounted product or service. Once you have your customers in your sales funnel, then you can slowly work your way up to achieving larger purchases.
When you are less experienced in the business world, it can be difficult to discern how you differ from your competitors. You may need to charge the same as your competition to make sure you are starting out on an even keel. Once you have been in the industry for a while, you can then work out whether your prices need to go higher or lower than your competitors to start seeing a real difference.
Is there one product that you can offer at a low price to bring your customers in the door. Known as a loss leader, this is a common pricing strategy to stimulate sales and gain new customers. It is also an effective way to attract customers and upsell additional products and services.
The Number 9
$7.99. $49.99. $104.99. Even when pitted against lower prices, the power of the number 9 reigns supreme. Whether it is consumer psychology at work or just a love for odd numbers, ending your pricing with .99 is bound to work in your favour.
This is one of the most common methods used by entrepreneurs. Cost-led pricing is helpful to make sure that business owners are taking variable costs, fixed expenses and their anticipated profits into account. It is often difficult to determine all the charges at the outset. Therefore, allowing a margin of 10% for error rather than experiencing a loss may be the way to go.
Customer-led pricing may sound odd at the outset, but it does work for some organisations. Think advertisements on Google where the customer leads with the price they are willing to pay. It may not be an efficient method for everyone, but asking your clients how much they want to pay for your products or services can be a very effective way of determining your costs.
Bundling is an effective strategy if you want to increase the average sales volume from your customers. It can even be used periodically to sell limited stock or to create an awareness of other related products. Used in many industries, this strategy sells grouped products at a lower amount than if they were purchased individually.
Placing a larger priced item on your website near cheaper alternatives can make the low-cost products seem more like a bargain purchase. Known as price anchoring, it is a method commonly used in restaurants to sway the buyer to make a cost-effective purchase. Clever visual layout will allow you to create a certain sense of value for specific products and services on offer.
Choosing the right pricing strategies to suit your business may take months of fine-tuning. However, over time, you will soon notice which methods work above others. You may find that options such as bundling and product placement reach their heights over holiday periods; while other strategies may be effective all year round. Every business is different and should be run accordingly. Once you understand and acknowledge the value of your products and services, then your options are unlimited.