THE SINGLE MOST SIGNIFICANT ELEMENT FOR A BUSINESS TO REMAIN COMPETITIVE IN THE MARKET IS ITS PRICING STRATEGY.
IF PRICING IS DONE INCORRECTLY, CUSTOMERS WILL STOP BUYING FROM YOU.
YOU MUST COMBINE THE FOUR PS OF PEOPLE, PLACE, PRODUCT, AND PRICE IN ORDER TO GET THE RIGHT PRICING.
IF ANY OF THESE 4PS ARE IN THE WRONG PLACE, SUCH AS PEOPLE WITH LESS CAPABILITY AND YOUR PRICE IS HIGH THAN THEIR AFFORDABILITY, THEY WON’T BUY YOUR PRODUCT.
ALSO, WHERE YOU SELL AND WHERE YOU BUY THESE PLACES MATTER FOR PRICING.
ALWAYS PURCHASE PRODUCTS AT LOWER PRICES TO SELL THEM AT HIGHER PRICES OR IN SCARCER QUANTITIES.
A PRICING STRATEGY MUST BE CREATED IN ORDER TO SUCCEED IN BUSINESS, JUST LIKE ANY OTHER FORM OF WORK.
I’LL SHARE THE 5 MOST USEFUL POPULAR PRICING STRATEGIES TODAY.
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Table of content:
2)previous post recap
3)what is pricing strategy
4)Types of pricing strategy
5)8 most popular pricing strategy
6)How to select right pricing strategy
PRICING STRATEGY: WHAT IS IT?
IT IS A WAY TO SET A PRODUCT’S OR SERVICE’S PRICE BASED ON CONSUMER DEMAND AND SUPPLY IN ORDER TO MAXIMIZE PROFIT.
Types of pricing strategy:
1) COMPETITION-BASED PRICING::
FOR THIS TYPE OF PRICING, YOU MUST SET YOUR PRICES BELOW THOSE OF YOUR RIVALS AND INCLUDE EXTRA BENEFITS FOR CUSTOMERS
THAT SET YOU APART FROM THEM, SUCH AS A GENEROUS RETURN POLICY AND EXTRA CUSTOMER SERVICE.
Pros: You’ll get more business if your price is well reasonable than your competitors.
Cons: Since product costs and demand are unaffected, you could suffer a significant loss if your production costs are higher than those of your rivals.
2) cost plus or mark up :
FOR THIS TYPE OF PRICING, YOU MUST MULTIPLY YOUR PRODUCTION COSTS BY THE PERCENTAGE OF PROFIT YOU HOPE TO MAKE FROM THE PRODUCT.
PROS: YOU CAN ANTICIPATE HOW MUCH PROFIT THERE WILL BE. NO WORRIES ABOUT SELLING AT A LOSS, THEN.
CONS: SINCE YOUR COMPETITORS MUST OFFER THE SAME PRICES AS YOU, IF THEY SELL THEIR PRODUCTS FOR LESS THAN YOU DO AND UTILIZE THAT AS A MARKETING STRATEGY TO GAIN MORE CLIENTS, YOU WILL LOSE CLIENTS BECAUSE CUSTOMERS MUST RESEARCH PRODUCTS BEFORE MAKING A PURCHASE AND THEY HAVE BETTER OPTIONS, SO WHY CHOOSE YOU?
THIS KIND OF PRICING GUIDE FOR SEASONAL BUSINESSES LIKE HOTEL, RESTAURANT, AND SELLING AIRLINE TICKETS. YOU CAN SET A PRICE IMMEDIATELY IN RESPONSE TO CUSTOMER DEMAND.
Pros : YOU HAVE A VARIETY OF PRICING OPTIONS, WHICH DRAWS MORE CUSTOMERS.
CONS: YOU MUST BE AWARE OF THE BEST SEASONS FOR YOUR BUSINESS OR FACE HIGH DEMAND. IF THERE IS A MISMATCH, YOU WILL LOSE MONEY.
With this pricing, you can provide free service for a limited period of time or with certain features. In this way, pricing is done to entice customers to premium offers.
Pros : By gaining customers’ trust in your business, you can perhaps persuade them to upgrade to premium services.
Cons: A few customers will choose to use free instead of converting. So Your Investment May Be Lost.
In this pricing strategy, products that were once sold for a higher price but were out-of-date or seasonal are now sold for a lower price. These Prices Provide Discounts, Like Black Friday Discounts. Thus, seasonal products like clothing, décor, and furniture sell using various pricing models.
Pros : Customers wait for this type of product, which boosts sales.
Cons: Large Sales at Much Lower Prices, Making It Sometimes Hard To Recoup Investment.
If your business is service-based, you might want to try hourly pricing because it rewards labor rather than efficiency. If you have a lot of projects and it’s hard to find the time, you can also price your entire project on an hourly basis, which will give customers the chance to consider your price and complete some tasks quickly.
Pros : You will receive more customers without having to decline them due to workload.
Cons: When you are pressed for time working on other projects, you cannot provide many customers.
In this pricing, the price of your product depends on its life cycle. As time passes and an item’s quality or lifespan declines, its price decreases from when it is first introduced. like TV and games.
Pros : Your old stock did well on the market.
Cons: Customers who purchase new products may become envious if they are sold at a discount and given the option to switch to a competitor.
8) penetration :
If you’re just starting out in business or want to expand to another nation, you can use this pricing strategy because you’ll first offer a low price to attract new clients or steal clients away from your rivals who are charging high prices. This Pricing Should Only Be Used For A Limited Period of Time Since It Will Not Produce Any Profit.
Pros : You can enter a market with a strong customer base and offer prices that will rise over time.
Cons: When prices increase, customers can leave. So You Need Slowly Rising Price.
In this pricing, you will set your product’s price in accordance with consumers’ perceptions of it in the market. If they deem it more valuable or exclusive, they will charge a high price for it. As High As Additional Luxury Is Considered. Here, influencer marketing is used to promote luxury goods including real estate, jewelry, and gold.
Pros : You can charge a high price to make more money.
Cons: Not Many People Purchase Luxury. Therefore, you must identify those types of wealthy people.
10) project based:
In project-based pricing, the cutter hires you for your service-based business in accordance with the timeline for project completion.
Pros: You’ll receive one payment from the customer for the entire duration. You now have proof of work and the chance to work on further projects for this client in the future.
11) value based:
With this pricing strategy, you will set prices based on what your customers are willing to pay or what they are interested in.
Pros : By connecting with customer sentiment, you’ll win over loyal customers who will help you market your product.
Cons: You must manage multiple buyer personas at once and adjust pricing accordingly.
Using this strategy, you will sell multiple goods or services at a discounted rate compared to purchasing them separately.
Either as a complete bundle or separately from that bundle, you can sell.
Pros : You can sell products upfront that are more difficult to sell when sold separately. Both your customers and your revenue will benefit from a large sale you can make.
This tactic makes use of consumer psychology to encourage purchases.For instance, if you give a customer 99% off, they’ll assume the price is below $100 when in fact there is only one difference.
You can make offers of the buy one, get one free or 50% off variety. This makes the customer think that they can get more for less money.
You Need A Deep Understanding Of That Market And Customer To Use This Type Of Pricing.
What the Client Wants. Do They Want Low Price Or High Quality? If Not, Provide Pricing.
Create Pricing Based On Location. You can use online advertising to reach any market and sell there for a profit.
🌿8 Most commonly use pricing strategy for online bussiness:
Create a pricing list for your product or service and display it publicly so that any website visitors may quickly choose the right option for them.
It is ideal for new or inexperienced business owners. Your business will become more transparent to customers as a result.
For this pricing, the customer must request a quote. One takes one to two days, therefore there is a chance of losing a customer. Use this price only if you have prior business ownership experience.
3) Freemium pricing:
Usually Software Or Technology Businesses Use This Strategy. They Provide Initially Free For A Period Of Time In The Hope That Customer Will Convert To Paid Premium Package.
This type of pricing is typically done in retail sales or online sales with lucrative discount offers.
5)customer oriented pricing:
In this pricing model, the customer is asked to provide their budget and goals in order to receive better pricing advice.
When you offer packaged pricing and customers are unable to choose the best option for their needs, this type of pricing works.
This kind of pricing is applicable both online and offline. To provide more value, you can create multiple packages offline as well as online.
For example, you could offer three packages of a particular product for free or at a low cost, followed by medium and premium prices.
You could suggest the popular sell of the medium option. The issue is that although we customers can buy more expensively, you provide less.
7)value based pricing:
For This Strategy, Understand Your Customer’s Needs. If They Want High Value Or Discounted Products. Therefore, Present Them.
8)competitive pricing :
Based on your competitor price give low price to be dynamic.
💥How Do You Pick the Best Pricing Strategy?
1) Examine the potential for your product or service based on the geographic location where you want to supply it,
the state of the market there, your inventory, and customer demand.
2) Analysing competitor data at the target location.
3) PAIN POINT ON THE BASIS OF BUYER PERSONA OR CUSTOMER WILLING TO PAY.
4) MAINTAIN BALANCE BETWEEN THE VALUE OF YOUR PRODUCT AND YOUR BUSINESS GOAL.
5) DATA ANALYSIS OF YOUR PRICES STRATEGY FROM PRIOR SUCCESSFUL OFFERS.
Finally, PRICING STRATEGY IS A CRUCIAL PART OF YOUR PROFIT OR LOSS, SO CREATE YOUR STRATEGY BY MANY SMALL TESTING PRIOR TO CREATING FINAL PRICING AND FIRSTLY CHECK WHICH PRICING IS RIGHT FOR YOUR BUSINESS GOAL.
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