How To Find A Price That Sells Lots

5 08 2010

How do you decide the best price for a product? Here’s a few very simple tips for pricing.Pricing is not just about working out costs and adding on some for profit. It’s also not about charging the lowest price you can afford to to cover your costs and undercut your competitor. It’s about working out what pushes your customers’ buying buttons.

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One response

5 08 2010
Marketing Wise

In general, there are two schools of thought on pricing. Firstly, there is pricing economics, where the price is determined by cost and overheads plus margin for profit. Secondly, there’s price as a basis for positioning. I’m an advocate of the latter. Pricing is best friends with branding. It’s about creating perception in the mind of the customer, and the first step is understanding how they perceive value. Unless you are in a highly mature or high volume market, where your customers are shopping purely on price, don’t compete on price – you’ll just cannibalise your margins and probably your business. The second make common mistake I see, is the assumption that pricing in the middle will get the most sales. Granted, sometimes this tactic works, such as with low attachment purchases, but it conditions the customer into thinking that you’re product is second rate. It is possible that pricing at a premium will sell more product, create customer loyalty and help create a more sustainable brand. When pricing, consider whether you want product longevity, and if you do don’t sell yourself short.

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