Company Pricing Strategy - Eight Tips For Improvement
Eight Ways to Improve Pricing
Do not just price items at your annual budget meeting. Prices should be consistently evolving with the ever changing market. Your customer's and competitors will develop an image of your business rather quickly when you come to market with stale prices.
1. Constantly Review Decisions in pricing. Do not just price items at your annual budget meeting. Prices should be consistently evolving with the ever changing market. Your customer's and competitors will develop an image of your business rather quickly when you come to market with stale prices.
2. Your customers are shopping around. As either a small business owner or the head of an international company, the best thing to remember is that your customers are getting smarter everyday. This is because of the internet. In under 60 seconds your customer can compare your prices with your customers.
3. Understand what relative price is. Relative price is the price that the consumer has related to the item they are looking to purchase. They may have seen an advertisement for a Snuggie for $19.99 and will now relate any further products such as this to costing $20 or less.
4. Price Elasticities will change. Studies show that consumers are more sensitive to increases in price than they are to decreases in price. This is why it is harder to sell products to new customers by lowering prices than it is to lose your existing customers by raising the prices.
5. Use sound research when setting your base prices. This should be done by any business that intends to be successful, but you would not believe the amount of people who refuse to do any research before going into business.
6. Although customers are aware of prices they are not constantly monitoring them. Most of the time customers can get the price differences but do either do not know how to compare prices, or they do not think to check before making a purchase. This will make these types of customers not recognize that you are selling your merchandise for a discount. This is why you should always have some way of showing your customers the normal retail price and the discounted price.
7. Customers will have a pricing range that they want to stay within. Your customers are not going to be focused on one certain price. You do not have to be perfect when setting your base prices. Do research and constantly monitor.
8. Pricing information is vital. The choices and preferences of your customers can be affected by the pricing information they receive from you. They will compare the different items in the category they are shopping for and form opinions by the prices that they are being sold for. Sometimes they will relate price to quality because there is no other way to test the product for quality assurance before purchasing.
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