In the first and second part of this article, we talked about the importance of shopper marketing for your business and shared some easy tactics related to the product, its placement and sales promotions that you can apply to make sure your products sell fast.
Now, let’s talk about pricing. Pricing strategy for your small business will set the standard for your product or service in the marketplace. Do your research early in the life of your business and evaluate the market. Once you understand consumer demand within your market, review your own costs and profit goals to inform your choice on one of the following pricing strategies:
- Penetration Pricing: You set your price low to rapidly enter a competitive market and provoke word-of-mouth recommendations, only to raise it later.
- Price Skimming: You set the price high initially and then lower it as additional competitors enter the market.
- Competitive Pricing: You set the price based on the price of the competition.
- Value-Based Pricing: You set the price based on the perceived or estimated value of a product or service. You can do that when there are few or no competitors for the product you sell.
- Cost-Plus Pricing: You set the selling price is determined by adding a markup to the unit cost. Your goal is to cover costs and generate profit without exceeding customer expectations for price.
Once you choose the pricing strategy that works best for your business, here are some pricing tricks which may help you boost sales:
- Not rounding up price tags. Also called “charm prices”, prices ending in .99 or .95 are associated by customers with discounts and better deals. And most of them round down the number, only paying attention to the number to the left of the decimal point.
- Use very little characters. Instead of €123.00 use 123. Studies have shown that even removing the currency sign creates the illusion of a smaller price in the mind of the consumer.
- Describe prices. If you tell shoppers your prices are low, they’ll believe you. Simply putting “only” or “low price” next to your price creates the illusion of a good deal they must take.
- Write prices in small font. It seems our senses are connected and not always in a rational way. Turns out, shoppers are more likely to perceive a price as low when it’s written in small font as opposed to in a large bold font.
- Use anchoring. Anchoring describes the shopper’s tendency to rely far too heavily on an initial piece of information (known as the “anchor”) when making decisions. In pricing, this is usually the first price you see. It can be in the form of the “initial” product price which is slashed, presenting other unrelated expensive products or even just exposing people to random high numbers before seeing the price of the product you intend to sell.
- Different pricing on similar products. An abundance of similar options freezes people. They think a lot, weigh options, and often walk away without making a choice. Or they make a purchase after much hesitation but then feel bad about it wondering what they’ve lost. After such an effect, they might never come back to the store. People are more likely to buy a product if a price difference exists, albeit a small one.
Setting the right pricing for your products (and using some of the above techniques to help your products sell) brings you the value you deserve for your products and services offered and secures the profits you need to invest in change and growth.
We’re here to help you sell your products and make profit fast! To learn more, please contact our sales team.