How To Avoid Setting The Wrong Pricing Strategy

Bizcrowd uncovers the right pricing strategy is crucial to a business' success. More importantly getting your pricing strategy right, amongst anything else. Whether you're dealing with products or services, pricing is something you can not visualise or realise in your own mind, until you are actually attempting to sell something. The following are mistakes you should NOT do:

• Mistake 1:
  Basing your prices on your competitors

  Why?
  You don’t know how they've come up with that price; it might be a loss leader that they've already factored into their marketing budget.

• Mistake 2:
  Lowering your prices to match competitors

  Why?
  Again, they could lower their prices for reasons that don’t necessarily align with your goals, and will have factored losses into their budgets that you hadn't considered.

• Mistake 3:
  Deciding prices just before you start trading 

  Why?
  It’s dangerous because you don’t have a real-time idea of the costs of acquisition and development, research, meetings, phone and computer usage, and therefore will not know if your price represents value to the customer.

• Mistake 4:
  Using low prices as your core business model

  Why?
  There’s a place for this tactic to gain new customers; however, basing your business model on this is dangerous. You’re not necessarily building a foundation of loyal customers, rather those that are only on the lookout for bargains.

• Mistake 5:
  Not building customer services into costs

  Why?
  Excellent customer service is an invaluable commodity in itself. Providing value for money to your customers by giving them great service is of course of paramount importance, but don’t undersell the cost of service to yourself.

• Mistake 6:
  Underpricing a services

  Why?
  Remember that a service, unlike a product, is intangible, so people tend to judge the quality of your service on two factors – recommendations and price. If you underprice your service it can appear ‘cheap’ and inadvertently turn people off.

• Mistake 7:
  Not asking your customers

  Why?
  If you need some gauge on your value for money offering, ask your customers, or you may find you’re losing sales because you have not adapted to their needs. Providing value for money requires constant monitoring. Offering free trials of a product or service at the start of trading is one method of testing the water from the outset, but can create a culture of 'freebies' that would not necessarily convert into enough paying customers. Indeed, you need to gauge both value for money and how your product or service fits with the values of your customers.

Read more at: https://bizcrowd.com/Article/877?noticeboardId=0

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