Pricing Products for Small Business.
Want to increase profits but don’t know how? Play with prices. Smart manipulation of prices has been proven to have a positive impact on sales and profit. Here are a few points to remember while thinking about using product price to get more profits:
- Balancing prices for your products is the key.
- The idea of balance depends on your target market.
- In some markets, it is easy to attract customers to low prices, in others, discount seeking customers can be challenging and rude.
- The best strategy is to set prices to appeal to the prospects.
- This will ensure you remain the most desirable option for the customers.
- It results in high profits.
- Prospects that don’t blink at high prices can be pleasant as well as demanding.
- The experience depends on the industry and the prospects expectations.
- With time, you learn that some businesses succeeded in doubling the average order value by eliminating low price offers, hence increasing profits.
- The short term financial results are positive but at times, the change places extraordinary stress on the staff.
- Non-ideal customers would turn off at the hike in prices.
- It is advisable to keep changing process to understand the market response.
- Some prospects make unreasonable demands at increase in price.
- Some threaten to switch to another provider when their demands are not met.
- In the service industry, drop in price makes it more appealing to its ideal customers.
- However, increased prices make people who value the work and take the projects seriously.
- Change also keeps the staff excited.
- It attracts customers to the new offer and builds momentum.
- As long as you maintain profit sufficiency, you can choose to appeal to any type of customer.
- When changing prices, it’s always useful to know what the other party is likely to do in the event that an agreement cannot be reached.
- Sometimes it is just not possible to reach to an agreement.
- There is no common ground so both parties agree to go to their separate ways.
- This is when your next best alternative will be required.
- It is something that you offer when you cannot find common ground with the other party.
- If you are selling a product that costs $100 you are selling against the next best offer that the customer can find.
- The more options the customer has, the weaker your pricing position.
- Understanding the other parties next best alternative gives you a major sales advantage.
- You construct an offer that is more attractive than their next best option.
- Exclusivity attracts attention.
- Creating a unique offer or quality that other firms can’t match, is the key to exclusivity.
- If you are the only person or company that offers what your prospect wants, you are in a very strong position to negotiate favourable prices.
- If you want to purchase an iPhone you have to buy it through the source, Apple.
- You may buy it through a retailer, either way Apple is paid.
- As long as you want an iPhone and aren’t willing to set up an alternative, Apple wins, because of exclusivity.
- An exclusive offer make it much easier to maintain high perceived value since there is no direct competition.
- Substitute or alternatives may exist, but if a product is set on your specific offer, it must be obtained through you, making it possible for you to set up high prices and maintain healthy profit margins.
- Innovation make exclusivity easy to maintain.
- Resellers find it typically difficult to establish exclusivity unless they play a role in product manufacturing, which is why retailers often create private label brands.
- If you are the exclusive source of what your prospects want, you win.
Meeting and socializing with industry experts will surely get you more ideas about successful pricing methods. I have always said that a business network comprising of selective and qualified people that you can count on, tap into and rely on for support, direction and insight is much better than a thousand followers on a social networking website. A very good way to form a network of genuine and dependable individuals is to invite them to connect on your company’s website. You may contact HyperEffects to know more about our one-hour free consultation session to all business owners to help them understand ways to grow their business relationships. We also work with your specific needs to create a website that may help you connect with your desired audience at a personal level.