Pricing: Too high, too low, or just right?

September 9, 2013 - Tags: Products Customers

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!


Comments

Posted by Canada.ca on October 17, 2013
Hi Marion,

When starting a business, one of the best courses of action you can take is to develop a solid business plan. This helps set the foundation for all of your business decisions moving forward. Our Business Planning section is a great place for you to start mapping out your plan.

Our Exporting and importing section has information on topics like market research, logistics, laws, regulations and permits that can help you succeed as an importer/exporter.

Another key consideration is financing. In our Financing section, you can view or search for financing programs offered by governments by choosing options like your industry, your location, and/or the reason you are looking for financing.

You may also want to contact the Canada Business service centre in your province or territory or call toll free 1-888-576-4444 (TTY 1-800-457-8466)

Best of luck with your new business!
Posted by Marion on October 17, 2013
Hi I would like to start a business doing retail and import export. This pricing information is really useful but I also need more information to get my business plan done and get money to help during my first year of business.

I would like to open next year. Thank you.
Posted by Brian on September 25, 2013
Pricing strategies are dependet on what you want to accomplish as a business. One of the key things is to remember what the Market will Pay for that product or service. IF your cost of goods is more than what the market will pay then your pricing strategy is useless. You will never make money. One has to analyse what the cost will be to get that product or service to market add on a profit margin and hopefully be somewhat competitive in the Market place. Keep in mind that the suppliers price is not the only thing that makes up the cost of goods sold. Factors such as utilities, employees, transportation and admin cost have to be implemented into a proper pricing strategy. Once you establish the proper cost of getting that service or product to market,it is time to implement your pricing startegy. Hopefully you can be profitable
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