Whether you’re a new or longtime small business owner, one of the first lessons of succeeding in your industry is mastering the right pricing strategy.
How you value and price your goods affects your profits, as well as your brand awareness.
There are many pricing strategies to consider, and you may use different ones for different products or services you offer. You can even vary your pricing strategy during different times of the year or for specific promotions.
In order to find the pricing strategies that will most benefit your business, it’s important to understand their purpose. Keep reading to learn about a few effective pricing strategies that your business could use.
1. Market Penetration
When you first introduce a new product or service into your industry’s market, it’s crucial that you make it stand out. This is essential for small businesses who are new to the market.
Just like you must learn how to budget for your initial costs, organize inventory, and perhaps even create barcodes (learn more on that here), you must also decide on your company’s brand reputation.
Introducing a new product is an opportunity for your brand to build a following and create trust with first-time customers.
With this strategy, you enter your product at a price just below your competitors. Even if this lower price comes at a profit loss, this first impression can be a make-or-break effort for your company.
2. Premium Pricing
In some cases, you have innovated a product that can’t be found anywhere else. If your target audience is specific and your business goods are truly unique, you can use a premium pricing strategy.
This strategy allows you to set your price a little higher due to the individuality that your product offers.
3. Psychological Pricing
As the name suggests, this is one of the pricing tips that relies on psychological responses from customers. For example, your product might be more successful if you set your price at 19 dollars instead of 20 dollars.
The first number in the price can have more of an impact on the buyer than the following digits, regardless of what they are.
4. Pricing for Bundles
Bundle pricing involves grouping several products under one price. You might recognize this from fast-food restaurants or small retailer shops.
By using this pricing strategy, you can sell off inventory more quickly, but it can sometimes come at a profit loss.
5. Promotional Pricing
You might see this strategy used in retail pricing. Similar to bundle pricing, offering coupons or “Two for One” sales can help your business compete for customers and promote specific products.
It also can improve the company value when patrons feel like they are “winning” something.
How to Select Pricing Strategies
If you are able to test out different tactics and find the right pricing strategies for your business, you’re on course to maximizing your profits and increasing your business awareness.
Because a significant part of your business probably involves the internet, you should check out our page for more insightful information.
