Pricing strategy is a very important part of the marketing. Price is usually an important factor affecting the success or failure of a transaction. Different prices mean different incomes and profits, which also determines different ways of profit distribution for suppliers, investors and agents. Without a reasonable pricing, profit recycle cannot be formed. Without recycle profit, there is no brand building and business model. So how much should it be priced? What factors should be considered when pricing? This article will introduce seven tactics on how to price your product and factors which you should consider when price for products to you.
1, Make Workout Cost for Pricing your Product :
Usually, costs include materials, packages, rent, rates, wages and logistics fee. Some products may have import tax. Add all of these costs together and calculate your final costs. Add margin to your cost and gain the final price.
2, Try to Use Promotional Pricing Strategy if You don't Know How to Price Your Product :
Promotional pricing always happens to two situations: 1, Festivals; 2, Stimulate to sales of particular products.
Festivals such as Christmas and Valentine's Day. People would love to buy something for themselves or families, lovers or friends. The two festivals are also shopping season. If promote some attractive compaigns, sales must be boosted.
For particular products, this product can be your star product. You can boost sales to next high level by using promotional pricing. Such as if buy this skin care products during this month, you will get two small free samples and get $10 refund at this product.
3, Price Product to Drive Long-Term Busines:
1. Change the capacity without changing the price; Coca-Cola and other canned foods often use this trick. It seems like it hasn't changed, but in fact, the capacity has decreased. Less capacity means that the same raw materials can produce more pieces. Naturally You will have more profits.
2. Introduce upgraded models: Sometimes the product just needs to update some details to increase the price. For buyers, it is taken for granted that the upgrade price is higher than the original product, so it is easier to accept.
4, Use Odd Number on Pricing Your Product:
What is the best mantissa when pricing? That is 9.
The answer is: Because such pricing will give buyers a feeling of saving money.
Although 39 and 41 are only 2 dollar away, in the minds of buyers, one is more than 30 and the other is more than 40.
Conversely, if you do not want to sell a product, you can set its mantissa to 1.
5, Additional Value of Your Product When Pricing:
If you encounter a product at your daily life, its first impression will cause a long-term effect on biding willingness for this product. We take black pearls as an example.
Black pearl was formed from a black-edged oyster. It was cheap in the 1970s and had no market, but it was brilliant after a "planning" by a gem merchant.
He placed black pearls in the showcase of Fifth Avenue in New York for display and marked them with incredible high prices. Meanwhile, he advertised these pearls at some influential magazines, placing black pearls beside expensive gems such as diamonds and rubies at the same page. He also invites famous movie stars to endorse.
In this way, things that did not know the value suddenly became rare treasures.
Price itself is a brand positioning. It is by no means rational and is not limited by the impact of supply and demand; Buyers' perception of product price is easily affected by other reference objects.
The cleverness of this businessman is that he put black pearls with the world's most precious gems together; Since then, the price of black pearls has been closely following the gems.
6, Use Bundles Tactics on How to Price Your Product:
There is a course case about pricing in Eastern European Business School:
Suppose you are a restaurant manager. Client A is willing to pay $ 10 for a burger and $ 5 for fries. Client B prefers French fries and is willing to pay $ 10 for fries. Burger is only willing to pay $ 5.
What methods can be used to capture two customers at the same time and maximize profits?
The answer is: $ 10 for burgers and $ 10 for fries, but the "fries + burger" package costs $ 15.
Not only did they retain both types of customers, but it also maximized profits.
Therefore, in the daily design of promotions, be good at using "package bundles" to attract buyers to buy packages.
7, Use Segmentation on How to Price Your Product:
When we buy something, we feel ached in mental, especial we need to pay for a big sum. Thus, how to make shopper think that they only need to pay for a small partial of money but not a big sum?
The answer is: Price segmentation.
Firstly, we can use a small unit to give quotation.
A friend of mine who sells biscuit on amazon directly uses piece to price. Such as $0.99 for one piece, and price always between $0.99 - $4.99. This tactic of pricing product makes his store rapidly gain many sales.
Two advantages of using this tactic:
You should let buyer feel your product is not expensive.
However, you will not buy one piece biscuit one time, you always buy 10 pieces, 20 pieces, 50 pieces or more.
Emotion Price:
In fact, each product has a corresponding psychological account in the buyer's mind. If you want the buyer to pay, you must give him a reason to use the account assets.
So, first of all, we have to analyze which psychological account buyers may put the consumption of this product into, and from which psychological account the expenditure will be more straightforward.
For example, a piece of clothing with a price of 2,000 dollars may be reluctant if you buy it for yourself, but you may pay without hesitation if it is a birthday gift for your lover.
Why ? This is because buyers classify the two types of expenditures into different psychological accounts. Clothes are bought for themselves as daily consumption expenditures, but when they are bought for their lover, they are classified as emotional or emotional maintenance expenditures. Obviously, most buyers are more willing to spend the latter cost.
Therefore, positioning the same product as a gift often gets a higher premium than positioning it as a consumer product, especially when positioning it as a high-end business gift. For example, a small pot of tea.
If it is a bit luxurious to buy it by yourself, Lipton is enough if buy for yourself. But if it buys for leaders and customers, small cans of tea immediately seem less expensive (in fact, the main scene of small cans of tea is indeed a business gift). In addition, even if you buy something for yourself, there is a difference between daily consumption expenditure and self-investment expenditure.
For example, buying kindle, if it's just for reading, it looks more expensive. But if it is to gain knowledge and improve yourself, it will become very valuable at once.
Factors Should Consider When Price For Your Products:
Know Your Customers
Price determines your clients' purchase cost. $20 and $200 are two different customers groups. To some extent, pricing is customers divide. That's market divide. Make market research by looking at budget - sensitive from customers. You can browse your history data from your existing customer base.
Know your competitor
Researching your competitor will help you decrease unnecessary loss. Compared to your competitor's products, whether you product has additional value, could you provide additional service for your product, can you provide same product for more higher quality? If so, no hesitation to set a higher price.
Know your market
Will you involve in price war for the same products with your competitors in the market? How many competitors sell the same product? And their products’ price? You'd better avoid the price war. In that case, nobody will earn much money from the war. This is a common phenomenon in the market. Develop additional value for your products or new products , then make a good price.
After you read our article, you must learn how to price your product, grasp tactics and have the ability to analyze factors affecting price.
