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Pegging competitive prices on goods or service packages could always be baffling for many start-up owners grappling with this big business necessity for the first time. This stems from having to strike a worthwhile balance between having to cover all production, sales cost, overhead and out-of-pocket expenses, to coming up with a fair enough profit margin — while at the same time being able to project whatever price you peg as reasonable and affordable one for the would-be consumer.
The process becomes even trickier once your product, service or brand happens to be one you perceive to be of distinct value owing to its uniqueness and that which no other existing product, service or brand in the market could also boast of. Sometimes however, it helps to back off a little bit so you could perhaps snap out of this line of thinking that’s so product/service/brand centric. You could also explore taking it from the perspective of the customer who actually begins any retail initiative with not much serviceable idea about real product/service/brand value.
The who, why, high, and low of pricing
Price perception is what people have about certain products, services and brands. Value delivery is what you promise as a retailer. These are two very different things that may or may not always relate logically no matter how much they drive the retail cycle. Once buying process convenience enters the picture, like in a business phone service that handles toll free calls, the perception of legitimacy also heightens.
Strategic pricing therefore doesn’t ask how much one thing or another costs but more so asks a totally different question: Who really wants to buy? The answer to that question indirectly determines the price perception you could play on. If it’s a retail item idea most likely to be bought into by a particular demography that’s laden with money, then you could price at a premium or even outrageously. It is highly likely that the market you are courting belongs to the leisure class that views aspirational retail items like those you offer must haves to make them become as fashionable, hip and with it as their peers. Any price you peg won’t be perceived as high, expensive or prohibitive since money isn’t an object to that demography. Just be sure that when you peg at a premium that you have extras to back that kind of price up. The price dictum that applies therefore would be — Price outrageously then strive hard to meet the standards.
If the market equation for whatever you offer however isn’t like the one above, try not to bargain basement your prices. Doing so could make your goods, services, or brands sound like they’re nothing special. Such a perception clearly defines cheap. Cheap should never be held as of having the same retail value and perception as reasonably priced. They could never and must never be the same.
Everybody wants something special
People would always fall for what they perceive as a bargain. This is the reason why malls, shops, stores and even online retail sites are always offering discounts, price-slash promos and weekend/holiday sales. The perception that such opportunities offer special rate cuts on goods and services is a strong one that urges consumers to capitalize on.
Adjust Your Prices Strategically
This is the same perception that drives consumers to overspend without being aware of doing so with upsize retail items willingly bought under the context of getting much more for a few additional pennies. What’s special however remains to be the emotional aspect related to the buying but rarely the actual value of products, service packages and brands. Strategic pricing is all about striking that emotional chord among consumers.