startup ideas, marketing ideas, conversations, etc.
Pricing Your Products and ServicesAs strange as it may sound, you can actually lose sales with a product or service that is priced too low.
You've heard the expression, "You get what you pay for."
Consumers tend to equate price with value. The less information or first-hand knowledge they have about a business and what it offers, the more this is true.
How pricing affects a consumer's decision also depends a great deal on what that product or service is.
Suppose you're walking down the aisle in a supermarket or a discount store, and you spot a new brand of paper towels that's marked below competing brands.
If you're on a budget, you'll probably at least consider buying them. If you're on a tight budget, you may put them in your cart without thinking twice.
On the other hand, let's say that the product is toothpaste that's priced lower than its competitors.
If you're not familiar with the brand, are you going to risk your oral health - and possibly a sizable dental bill - on a toothpaste that might not even be effective? Probably not.
It's all about consumer perceptions and how they act upon them. Identifying and researching your target market is crucial.
What might be considered a bargain by one consumer might be perceived, based on price alone, as an inferior product by another consumer.
If you price a product or service too low, you not only make less per sale, but you can also make less sales if your pricing strategy has a negative effect on your target market.
Remember - it's all about the consumer's perception.
On the other end of the spectrum...
More often than not, it's a price that's perceived to be too high that turns off most consumers.
"Too high" might mean more than similar products or more than one's budget allows.
It might also be a price that's more than what the consumer perceives that the product itself is worth.
Even if you create a unique product, you're still competing. In this case, your "competition" is what your prospective customer expects in terms of value.
It's very easy to price yourself out of the market by setting a price that's too high.
However, it's also very easy to price yourself out of business by pricing your product too low.
Sometimes, too low of a price is set due to an error in calculations or judgement.
Other times, it's a deliberate decision made in order to attract customers. (This can be the case with new businesses in an effort to began building their customer base.)
Instead of pricing too low, look at ways to add value to what you offer that don't require an equal outlay of materials or time.
Personal attention, gift-wrapping, delivery and free access to a membership site related to the purchase are a few possibilities.
Remember that it's all about the consumer and what they perceive to be the value of what you're offering.
That's why intangible benefits, such as peace of mind or convenience, can make all the difference.
|About Create Your Market | Site Map | CreateYourMarket.com Main Page|