Among the most crucial decisions you will need to make as a business owner is your business’s pricing strategy. Essentially, you have to make certain that your pricing appeals to your target market. However, you also need to ensure that you don’t lose profit.
Pricing your products too low might not make you enough money while pricing your products too high could turn off potential customers. So how can you set a pricing strategy that will work for your business? Here are some commonly used pricing strategies to consider.
With this pricing strategy, you group products together and sell them for a single price. For instance, “buy 2 shirts for only $9.99.” This is an excellent approach if you are looking to move your inventory the fastest way possible. It likewise encourages shoppers to purchase more because of the irresistible deal.
Plenty of pricing tactics depend significantly on psychological strategies, and this is a prime example. One widely used tactic is including the original price of your product and offering it at a reduced rate to show how much customers stand to save if they buy now.
Another popular strategy is to display one product next to an expensive product, as is the norm in retail shops. For instance, you could show a $250 smartphone together with an $800 one, and shoppers will usually lean towards the smartphone with the lower price since they see it as a bargain deal.
The gist is that you place your offerings next to each other to feature what customers stand to gain from each. For this to work, you need to highlight the best package, which doesn’t always mean the most affordable.
This pricing strategy is likewise popular among supermarkets and department stores but involves calling out the competition. Start checking out your competitors through price monitoring or tracking, and if you find that you could offer a similar product lower than your competitors and still get a decent profit, then you should definitely highlight that to drum up more business.
Whether you’re offering 10% off, loyalty points or a flash sale, a sales promo is an excellent way to get more shoppers to buy from you. To make this tactic work, make sure that you don’t hold constant promos because it might lose its effectiveness.
When doing a promo, place a time limit on the promo so you can create a sense of FOMO or fear of missing out on your target customers.
The Number Nine
Many retailers use this pricing strategy, and it basically works by pricing an item to look more affordable so that shoppers will be more inclined to purchase it. For example, instead of selling a pair of shoes priced at $20, you sell it for $19.99.
There’s a wide variety of pricing strategies you can choose from, but you have to decide which ones are right for your goals for it to work as expected. Get in the habit of testing different strategies to figure out which ones bring you more customers and profits.