The right price for your product or service will make all the difference between using red ink or black ink on your accounting books. Unless you have a smart pricing strategy all your hard work of getting your business up and running could collapse.
Here are some tips for how you should approach your own pricing methods:
Not All Prices Should Be the Same
A research study conducted at Yale University found that when two of the same type of products were priced exactly the same customers shied away from making a purchase as opposed to when the items were priced differently. This doesn't mean you should mix up your prices on the same products. Just understand the mind of the consumer. Perhaps it's more about changing the pricing with an item that has a noticeable variant like size or design. This idea also comes into play when stacking your product line up against competitors. You should always keep an eye on competitive prices.
Try Price Anchoring
Price anchoring taps into our tendency to exclusively factor the first price we see when it is set against a second higher price. Restaurants will use this tip when they are selling expensive items together. The $50 lobster looks pretty good compared to the $75 Kobe steak. The result? More lobsters are sold. The basic premise is that you're creating a sense of value for your customer. In other words, give them something to compare to.
To Make a Sale, Decrease the Sticker Shock
What sounds more like a bargain: a subscription for wine of the month club at $50 a month or $600 a year? They are actually the same price, but the consumer thinks the monthly cost is more affordable. This is the approach you should take in your sales campaign. A fee attached to a product should be a "small fee." Bundle products together into a single "great bargain package." Appeal to the grander solution of a problem.
Use the Number 9
The number 9 has become so ingrained on the shopper's mind that it actually holds appeal. You can reduce a product from $80 to $60 but it might be stronger to go down to $59. It works every time!
Test Your Prices
There is a trial and error when it comes to finding the sweet spot of pricing. You might have to experiment with different price points to see what works best for your product. If you start a new campaign with a lower price point, make sure you get your marketing up to speed so all your customers will know.