Imagine you’re launching a new product you’ve been working on for months. It’s perfect. Your creative ad copy is going to really hit home with your target market. You even have an affordable contract for product distribution. All you need to do is slap a price down and all your hard work will mean you’ll get to see money rolling in. Out of the 4 P’s of the Marketing Mix (price, product, promotion and place), doesn’t it seem like pricing would be the easiest one to nail down?
Then you start thinking about price and it’s really not so easy. Is it a unique product with few competitors where you can afford to price it a little higher? Are your potential customers going to be turned off by the high price? Are you in a crowded market place where you need to price low? What if you price too low and you can’t cover your costs?
It’s never a bad time to review your pricing strategy. Not every pricing strategy is the right one for every business and each business can utilize multiple strategies. Here is a quick look at 6 different pricing strategies for you to consider the next time you launch a new product or decide to re-consider your current pricing.
Competitor Based Pricing
Just as its name infers, this strategy focuses on your competitors. What are your competitors charging? Are you able to set a price without worrying about your own costs? What are your luxury and budget competitors charging?
Value Based Pricing
Pricing focused on determining on how much a customer is worth to you. This can be tricky to determine at first and may require you to put some customer lifetime models together.
Cost Based Pricing
Determine how much your product costs to make and marking it up by a percentage or flat amount.
There are a number of techniques when using promotional pricing including offering special event pricing, comparison discounting (Was $100, Now Just $75) and offering pricing well above your competitors with heavy discounts on other items.
Did you know you can influence your customers’ perception of your product by making the price look more attractive? Consider that the next time you upgrade to a large pop for just $.25 more.
New Product Pricing
Gain the attention of your market by launching the product at a very high (or very low) price and gradually lowering it (or raising it) over time.