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6 Different Pricing Strategies : Which Is Right For Your Business ?
Small businesses running across the us economy play a vital role in the economy of US . Most of the small business run on an annual average of $44,000 as a revenue. Some of the companies even earn $25,000 or less . There are various factors that can have a positive effect in your business and revenue potential. One of the most important strategy is the pricing strategy owned by its owners.
If you want to play a good game in the business market then pricing is the key to your success a good pricing strategy helps you in perfectly determining the price point at which you can maximize your profit to the best on sales of your product and services.a good pricing strategy consists of wide range of factors that should be kept in mind to create the best pricing strategy and those factors are production & distribution cost, positioning strategies ,competitor offering and the customer target base of business
Pricing is a very difficult to determine a the price should be so perfect that it won’t hurt your business and also keeps the consumer happy as customers won’t buy a product if the cost is too high and if the cost is too low to cover your manufacturing and distribution then it will surely hurt your business.not only the product price but the price of place and promotion , also have a profound effect on success of your business.
Further in this article you will learn about various pricing strategies that are surely going to help you and your business:-
1.Pricing at a Premium
Premium pricing ,is based on maximising the profit at the early days of business by putting the price higher than the competitors if you are dealing with unique goods in your small business.
To make a customer buy a product at higher price a business owner should work hard in order to create a good which is a value perception.
Not only the quality of product but there are other factors to support your premium price which are the marketing of product , exclusive packaging of the product and decor of the store where product are meant to be sold.
2.Pricing for Market Penetration
The penetration pricing help you to penetrate the market and becoming the best seller by offering consumers a lower price than competitors to attract them towards you. Many newcomers in market use this technique to draw the attention of their buyers from their competitors but this technique can also cause an initial loss on your profits so it should be kept for a period of time.
Over a time being penetration pricing can help a small business to stand out of the crowd by increasing awareness of consumers initially increasing their sales .after a long period of penetration most of the businesses raise their price to show their position in market as they have made many customers .
Economy pricing technique targets customers who are price conscious and is used by most of the businesses in line of food and discount retailing . in this case businesses reduce their product price by minimizing the cost of marketing and production which makes customers to feel free to buy their product.
Economy pricing is effective for large companies like wal-mart dollar store and others and can be dangerous for small business because is needs large production and sales to minimize the cost price. And it’s hard for small business to maintain their profit due to lack of sales and low price.but lowering price for loyal customers can be a great idea for upcoming future of firm.
Price skimming is a technique which is used to maximize the sale by launching a product at high price and gradually lowering the price as competitors price appear in market.
The best part of price skimming is that is helps to maximise profit through early adopters before the price being dropped in order to attract price sensitive customers.price skimming helps business recover the development cost but also creates an illusion for customers for exclusiveness and quality of price when the product is introduced in market .
With the american economy it is still restoring itself to full health.The price is major concern for american consumers. Psychological pricing targets emotional levels of customers else than the logical one and encourage customers to buy the product.
For exam if you put up a price for one phone at $199 will attract more customers than putting it at $200 dollar rather the difference is too small but is works .It is proven that customers focus on first number of price rather the following units.The main role of psychological pricing is to create an illusion in mind of customers for enhanced price of product.
Bundle pricing means selling multiple product as a bundle which will cost less than buying those product individually.Bundle pricing helps to sell those product which were not selling and taking up space but also helps in creating a value perception in eye of customers as you are giving them something for free.
The companies that sell complimentary product use this bundle pricing technique and it is proven effective for them.For an example a restaurant can present free dessert with with meals on particular days of week. But one should make sure that the price of higher value product covers up the lower value product which is meant to be free.
These were some basic pricing strategies that most of the business owners use these days to grow and these were some of the best proven techniques to stand in the market in current economy.
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