Pricing, the most important aspect of running any business. Regardless of which industry you are running your business in, pricing is a major factor in determining how successful you will be. Bad or inadequate pricing not only makes it difficult to maintain decent profits, it might just scare away your potential customers and that’s just a start. If you aren’t careful, you might just find yourself in the middle of price a war with your competitor, battling relentlessly for market share all the while your profits bearing the brunt.
Even though there is a tonne of info on the subject of pricing, a lot of businesses still continue to fall prey to the age old pricing blunders You can use data for better pricing. Here is a use case about product pricing using Amazon datad . Save yourself the trouble, here is a list if pricing blunders you should avoid at all cost-
Pricing your products too low
We know what you are thinking, aren’t low prices suppose to result in higher sales? But that’s a myth. When you price your products really low you are undervaluing them. Although you may see a rise in your sales initially, but it will only be a short term boost as the discrepancy between the low prices and the cost will soon start to catch up.
Pricing is one of the key tools in shaping your target audience’s perception about your brand and products. Keeping the prices too low might make your products look cheap and may generate a perception that they aren’t of a good quality.
Determining prices solely based on cost
Sure you would want your prices to be determined only after the cost of the product and other charges have been taken into account to maintain decent profit margins, but don’t let this be the only criteria. Take into account the larger picture. Determine what role will that product play in your marketing strategy and how will it define your consumer base. It’s always a great idea to try variations of product offerings, each of which will play a major role in shaping your marketing strategy.
Keeping it simple is the golden mantra. After a price has been determined, ensure that there are no chances of a miscommunication regarding the price of the product. One would think that $115.00 and $115 would make no difference to the consumer but couldn’t be more wrong. Researchers show that these simple details make a big difference and directly affect the consumer’s perception, affecting the sales. This precaution should be applied to not only prices but to various schemes offers as well.
Not segmenting the target audience
If you are offering a range of products or even a variation of some basic products, you are bound to attract a variety of consumers, all of whom will have a variety of their own reasons. So it’s rather obvious that you shouldn’t treat your entire customer base as one homogeneous unity. Your consumer base if rather big and wide; that into account and try fixing the prices in a way which caters to a large number of these segments, so that each customer can have a personalized experience.
While we have listed out blunders to watch out for, avoiding these simply won’t be enough. To really have an edge over your competitors, you need to analyze their marketing and pricing strategy. Competitive intelligence, i.e. analyzing publicly available data to gather info about your competitor’s strategy will surely come in handy in such situations. For any queries, feel free to meet us over a cup of coffee. Contact us here