Eyes on the prize

A business must have a clear idea of what it intends to achieve with its marketing campaign, and formulate the marketing mix accordingly. Customer reaction to certain prices must be taken into consideration.

For a business that has just begun operations, for instance, the main aim may be to achieve high sales revenues that cover the expenditures incurred in setting up and running the business. Prices may thus be set higher than competitors in order to reap in the desired profits.

However, if a business is already an established one, the objective may be retaining the customer base that exists for the business offerings. An advisable technique for this purpose would be to keep the price equal to or slightly higher than the competition in order to maintain existing buyers and attract new ones.

Know thy product

Pricing an offering will of course depend on the nature of the product. The good’s desirability, value, and uniqueness are all important aspects.

For certain products that are immensely innovative and geared with higher-class consumer groups in mind, a good route to take would be allowing the price to match the high standards set by the offering. Technology giants often follow this place on action with their new releases, basing their pricing decisions on how much a customer covets their products.

There is, however, an argument to counter this strategy. The secret to pricing certain good quality offerings is to keep the price sound: the psychology behind this technique is that when the customers pit the superior features against their price, they think value-for-money. This can be the key to making the offering a great one.

The cosmetics industry can be used to provide an example for this technique. Certain drugstore brands tend to keep the price of well-loved items low despite their cult status. The purpose here is to keep old buyers coming back for a product that continues to deliver, while generating more leads by word of mouth.

Know thy customer

In recent years, consumer psychology has come to play a prominent role in the pricing decisions made by companies. Businesses are constantly conducting research into what attracts and retains customer attention and loyalty. While the buyer may not realize it, psychological pricing is a well-developed secret and one that is carefully executed to ensure a purchase.

Whether the goal is higher purchases or higher profits, the business must price the product accordingly. The psychology is simple: if a company wishes to ensure a growing customer base, the price is kept low. Reasonable rates attract customers, and these coupled with quality retain their loyalty. People enjoy consistency in every aspect of life, including purchase decisions.

If, however, the goal is to generate greater sales revenue and enjoy higher profits, the business must carefully look into the type of customers that are willing and able to purchase what it offers. Once thetarget audience is determined, prices can be set high with the knowledge that sales revenue is guaranteed.

Business pricing secrets are a careful mix of the firm’s targets and their offerings. These two in turn create a specific blend that operates to attract the right type of customers and elicits the anticipated response from them.

Readers may follow the link below to access software that can add pricing tables and other elements to websites:

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