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[W385]What Are Pricing Strategies

by Mrrb Mrrb, Mrr

Too high, and scare potential customers away. Too low, have to make alot of sales in order to make it worth my while.

What is it about a product that will enable it to be sold at a decent price? How can we entice our potential customer to make that "click" and purchase our product?

Trying to beat our competition on the basis of price alone is a losing proposition- for us and for our competition. We have all had that experience- buy a product and then see it offered for free at the next giveaway. It's hard to entice customers to purchase something that someone else is offering for free.

So how can we get that all important sale?

First, find a product that cannot be devalued. One that cannot be given away. One that will hold its value because of the "right" rights that it has, that is, rights that definately state "that this item cannot be given away and cannot be sold for less than xxx." When you purchase such an item, you know that its value will not be diminished by other marketer's actions.

Second, package it in such a way as to increase its perceived value. Customers do not purchase features, they purchase benefits and value is an important benefit. But what one customer perceives as being valuable another will consider nice but not really necessary. The trick is to mention several features and benefits that will make it valuable to more of your customers. For example, some customers will consider free installation as having high value as they are technically challanged while another customer will place high value on the free updates being offered. It all depends on the customer's skill level.

Third, don't make the mistake of pricing your product too low. You may think that you will get more sales this way but what you are doing is actually lowering the perceived value of your product. If you place a reasonable price on your product, you are telling your customer that your product has worth. If he perceives the value of your product, he will be more likely to make that all important "click"!

Fourth, create a sense of urgency. Put a deadline on the current price. Statements such as "for today only" or "this price is good only for a week" will urge the customer to get it now rather than saying,"I'll wait til tomorrow". Have you noticed some salespages where the price is actually increasing as you watch? Now, that creates a definite sense of urgency! The customer will want to click that button NOW in order to lock in a price.

If you have created a sense of value to the customer and they get to the bottom of the page and actually see the price increasing, they will be far more likely to make the purchase promptly. They see its value, they are interested, and they see the price increasing- a perfect formula that equals sales!

As a good rule of thumb, you must look at your strongest competitor's price for a given product and sell yours for 5% less. This gives your customers a reason to buy exclusively from you, especially if you price all of your products in this way.

It would be a simple matter if all pricing could be done this way. The truth about effective pricing is that you must be aware of the perceived value of the product in your customer's mind. Not all situations are equal, and you may be able to command a higher price than normal because you carry an item that is hard to find or your terms of sale (TOS) are more enticing to your propective buyer.

The most profitable businesses offer the best TOS to their customers. If your business offers support after the sale like we do, you are more likely to gain trust upfront from shoppers visiting your web site. Guarantees of 100% satisfaction are very appealing to new customers.

Try to answer product questions on your website in the form the benefits of the product. This allows even more credibility to your business and cinches sales that otherwise might be lost due to not enough information while your prospects are shopping online. Profit on the internet is derived from matching information about a product or service to the specific want for satisfaction as perceived by your customer.

Then you must consider a thing called elasticity. This is the common value of any marketable product. If the product you are selling is a hard to find item or an item that has a large amount of value added to it, then it is said to be highly elastic. On the other hand an example of an inelastic product would be something like common table salt.

Pricing a highly elastic product gives you more room to experiment with a correct pricing strategy. I recommend that you gauge the value added components of your product to arrive at an adequate price. For example, if you were selling winter coats, the value added components would be such things as down fill, a fur lined hood, or maybe an insulated inner lining. All of these things add up in a consumer's mind when making the purchase.

The point to remember is that the customer knows what they want. Your job is to give them the product they want, and price it so you can secure the sale and make future sales from the same customer as well. You would be well advised to pick a pricing strategy for all items of a category and apply it to all the items under that category to keep consistency in the customer's mind.

To summarize the main point, consumers will always attach a perceived value to every item they want to buy. If they think you are charging too much for the benefits that the item provides, they will not purchase from you, but continue searching the web. This means you lost a valuable customer and future sales.

To prevent this from happening you must research your competitor's prices and TOS. Then develop a pricing strategy that meets the needs of your customers and provides for the immediate sales to your company. In short, people buy the most benefits they can get for the lowest price available.

Article Source : Pg. 83

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Both Mrrb Mrrb & Marc Entz are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Mrrb Mrrb has sinced written about articles on various topics from SEO Search Engine Optimization, The Internet. Susan BernauMaster Resell Rights Blowout is a membership site with one goal in mind- to help you succeed.Take the road to the "right" rights and watch your profits explode!. Mrrb Mrrb's top article generates over 480 views. to your Favourites.

Marc Entz has sinced written about articles on various topics from Lose Weight, Travel and Leisure and Marketing. . Marc Entz's top article generates over 8100 views. to your Favourites.