Adding a price tag to our products and services might seem like a very easy task but there is so much more to it. Almost all companies, large or small, base the price of their products and services on production, labour and advertising expenses and then add a certain percentage so they can make a profit. However, there are other factors which play a role in how you add a price tag.
Prices are not solely affected by cost of production, they are equally affected by the ability to pay, market conditions, competitor actions, trade margins, input costs and more. Depending on where you are in the competition chain of your industry, you might want to consider employing these strategies in fixing a price for your products or services.
This is for the new kid on the block. Marketers use penetration pricing to gain market share by offering their goods and services at prices lower than those of the competitors. This strategy is a sleek way to get your products out in the market so that the products raise consumer awareness and induce buyers to try the products. However, there will need to increase the price when you have gained market entry, to avoid regrettable losses.
Businesses use bundle pricing to sell multiple products together for a lower price than if they were purchased separately. This is an effective strategy to move unsold items that are simply taking up space. Bundling also creates the perception in the mind of the consumer that he’s getting a very attractive value for his money. If you sell hair care products, you might decide to sell a shampoo alongside hair conditioner and serum or oil as a bundle for an inclusive price that might appear cheaper to your customers. If you run a cafeteria, you can also choose to offer a free dessert with an entree on a certain day of the week.
This works for products and services that are complimentary.
This could be your magic wand when you have few or no competitors to bother about. Introducing new products and set their prices high. This method enables businesses to maximize profits before competitors enter the market then prices can be dropped.