Pricing: Too high, too low, or just right?
Setting prices is about more than just choosing a price based on what you think a product is worth, or what you think a customer will pay. A solid pricing strategy can help you attract customers while bringing in the cash flow you need to succeed.
Offering a range of prices can help you appeal to a variety of customers. If, for example, you currently rely on sales events to attract customers, you may be missing out on profits from customers who would happily pay more. Conversely, offering only expensive products or services could drive others away — the key is to find the right balance.
Here are some strategies that can help you set prices:
Versioning: Give your customers the option to choose between different price points — low, middle, and premium prices. For example, a gym could offer:
- A regular membership for $100/month
- A premium membership that includes 24-hour access for $150/month
- A VIP membership that includes 24-hour access, a private locker, and monthly sessions with a personal trainer for $225/month
Cross-selling: Offer your customers additional products or services. For example, a cycling shop could encourage customers to buy headlights and bells for their new bike.
Bundling: Combine several products or services in a bundle. For example, a landscaper could offer bundles that include lawn mowing, hedge trimming, and leaf removal.
Add value: If you can't beat a competitor's price, add value to your product or service to make it more enticing. A camera store, for example, could offer a one-on-one tutorial with the purchase of a camera.
Use pricing to solve existing problems: For example, a bowling alley experiencing slow afternoons could offer a seniors' discount for games played before 5 p.m.
No matter what pricing strategy you use, it's important for you and your employees to be able to explain the value of your products and services to your customers. It's also important to review your pricing strategy on a regular basis and make adjustments when needed.
A good pricing strategy will help set your business up for success, so what are you waiting for? It's time to get pricing!