Category Pricing Your Offers

How do you price your products? This is one of the most important decisions you have to make when bringing a new product to market. How you set your prices plays a major role in how much you sell. It also gives you a way to set your offerings apart from the competition and customize them to your customers’ preferences. Here are 6 ideas for offering more than just the standard price.

Package Pricing

Package pricing offers different levels for the customer to choose from. A Basic Level might offer a simple version of the product without any bells and whistles while the Gold Level offers every feature, priority support, and extra goodies. Your customer gets the option to pay what they’d like for the product and enjoy only the features they need.

Position Yourself as a Luxury Brand

The standard logic of pricing is that undercutting the competition increases your sales. This is usually true, but another strategy is the exact opposite – charge more than your competitors, but really drive home in your marketing the unique benefits only your product offers. This way, you position yourself as a more advanced version. It takes a bit more effort on your part in positioning your products in the market, but you’ll earn more per unit sold.

Decoy Pricing

Set your product price slightly higher than you expect your customers to pay, then offer sales and deals when you want to move units. You can offer discounts to influence buyer behavior, such as getting them to share on social media or join your email list. The secret to this strategy is that the sale price is actually your target price.

Freemium

Offer a free and premium version of your product. The free version has very limited features and is designed to give the customer a taste of what the premium version offers. Many apps and software programs follow this model. While enjoying the free version, the customer comes to understand the value of the premium version, and eventually upgrades.

Bundling

Take a group of products that your customers would benefit from buying together and offer them as a bundle for a discounted price. With the bundle, the customer gets each individual product at far below its individual price. Just like decoy pricing, your target price can be the bundle price, and this can be used to influence buyer behavior.

Dynamic Pricing

Airlines and other businesses in the travel industry use dynamic pricing. The price goes up during high volume buying seasons and down during the off-season. Dynamic pricing helps you drive more sales during times when you don’t usually sell a great deal. Most big companies use algorithms to set prices automatically, sometimes varying even minute by minute. While you may not get that detailed, you can still adjust your pricing for maximum profit.

This is just a taste of the creative pricing ideas businesses use. These strategies offer more flexibility for you and your customers and can help you sell more. Consider and try some of these outside-the-box ideas and see what works for you.

One of the biggest challenges for any business is setting prices for its offers. It’s also one of the most important obstacles to tackle, as it directly affects the bottom line. Here are some things to consider to make sure you get your pricing right the first time.

Initial Research

Before you can even consider pricing, there are two factors you need to understand well: your audience and the market.

You should have a customer profile that tells you what problems your audience faces, how they shop and feel about money, and what they perceive as valuable. The goal here is to position your product or service as offering unique value that helps them solve their problems.

The other factor is the market. Get to know the competition and study products similar to yours that they’re selling. This will give you an idea of what the market will pay, and you can position your product accordingly.

Cost Pricing

The most basic tactic for pricing your offering is called cost pricing. You calculate the cost of producing and delivering your product, and then set your price so that you receive the margin you want.

However, this isn’t the most strategic approach since it only considers the product and not the market. It’s important to understand cost pricing so that you ensure profitability, but the right price is all about perceived value, not actual cost.

Undercut the Competition

With knowledge of your competition and customers, you can set a price that the market will be willing to pay. One strategy is to undercut the competition. This will give you the low-price advantage and make it easier for you to draw away customers who are unsatisfied with your competitors’ products. You’ll be offering a cheaper alternative.

But even if you choose to be the low-priced alternative, you still need to drive home the unique value of your product. If low price is your only selling point, it’s easy for a competitor who can take a loss to undercut you and steal away your customers. It’s not enough to be the cheapest option.

Price Your Product Higher

Another strategy is to price your product or service just above the competition’s. In order to do this successfully, you’ll have to position your product as offering something more. Your branding should tell people that this is a luxury product or a product with expanded features.

You can get away with charging more than the competition if you ramp up your marketing by doing things like:

• Emphasizing the uniqueness of your product, such as special features or customization options the competition doesn’t have.

• Laser-targeting your market by getting as specific as possible; for example, focusing on a specific segment and tailoring your marketing to that audience.

• Add urgency to your marketing. Set a limit to how many units you’ll sell or a cut-off date for taking orders. When there are limited supplies, people will be more likely to perceive your product as rare and valuable and therefore more willing to pay extra for it.

Start researching your pricing early, even in the beginning stages of product development. Use the data you uncover about the market and your customers to set a price they’ll be willing to pay. This decision usually takes longer than most businesses expect, and it’s not something to leave to the last minute.