Tips to Improve Your Pricing (Strategy)

Hello, I’m Jim Glover, That Branding Guy for Once a Day Marketing™.  Today we are reviewing tips that may improve your pricing structure.

Pricing your product is much more complex than it appears.  There are numerous strategies for setting prices that include discounting, dynamic pricing and newer models featuring no tips.  Once you settle on a strategy, you then have to determine exactly how the price should appear on the sticker, sign or menu to appeal to the customer.

Here are a few tips centered on the psychology of pricing to start you in the right direction.  I recently read these in a blog by Kissmetrics and think that all have merit.

           

• Round numbers – an amount with .99 after it is commonly used to give consumers the feeling of a lower price.  Research shows that most customers prefer the simplicity of a whole dollar amount.
• Anchoring Effect – Consumers tend to fix on (or anchor to) the first pricing they see.  Reading from left to right, when the lowest price is displayed first it is more difficult for the customer to move up to a higher price point.  Consider showing your higher priced items/offers on the left.
• Product value vs. Price – When customers complain about the price, they are really concerned about the value proposition.  Increase your value proposition rather than lowering the price.
• Raise the price – Consumerism is based on perceived value and pricey items are associated with higher quality or craftsmanship and are more desirable.  A higher price tag may create the feeling that the product has more value even when it had not changed.
• Stop using $ - Using the dollar sign in your pricing can hurt sales.   The symbol reminders consumers that they are spending and they may become shy about purchasing.

Review these tips, then consider how to use them in your pricing structure and also develop your own methods for creating a sense of value and eliminating barriers customers may have to making that purchase.

Once a Day Marketing™ positions brands to become #1 in the minds of target customers.  Visit our website at www.onceadaymarketing.com.  Contact James Glover at (505) 501-1330 or email glover@onceadaymarketing.com.  Listen to Ask Those Branding Guys™ every Monday at 11:00am (MT) streaming live on SantaFe.com KVSF 101.5 FM.

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