28 Oct Pricing Strategies: When the Price is Right
When it comes to pricing strategies, getting crystal clear on what you have to offer is how you can maximize the price you’re able to charge — and people will be happy to pay.
Pricing strategies and methodologies are a good bit of science coupled with an equal amount art. To make sure your price is right, you have to continually balance your own cost structure and profitability with customer perceptions of value and your competitors’ tactics. – Source: The ABCs of Pricing on Inc.com.
One way to increase customer perception is by “packaging” your experience, knowledge and value. By doing this you can maximize your revenues and reputation in the marketplace. It’s a very effective pricing strategies. Think bundling. There’s a second upside to this, too. By packaging you can create new products and services that leverage what you’re already doing in your business to increase your bottom line.
It’s a good way to raise your prices, too!
What’s unfortunate is many entrepreneurs today create pricing strategies that lower their prices. They’re reacting to what they perceive people want because of the recession. This is almost always a big mistake.
Aside from the obvious profit loss caused by hasty discounting, there is the more pernicious reality that discounting and promotions condition the buyer to expect lower prices. This customer mindset makes it hard to raise prices later when times are better. – Source: Pricing Strategies for the Downturn, Harvard Business Review
On the other hand, pricing strategies to increase prices should be handled delicately. If not, your strategy could backfire. Case in point, Chargify. At the beginning of this year they announced changing their pricing model to eliminate their free service. It was the way they handled it that was bad.
Chargify’s clients were happy—as long as they didn’t have to pay. But when prices went up, the goodwill went away.
“I’m sure you’ll be laughing all the way to the bank, but not with my money,” a Chargify customer posted on the online tech forum Hacker News. “Today you’ve turned around and told all of us that we don’t matter to you,” groused another. Another was more direct: “Wow. What a kick in the nuts.” Source: Case Study: How to Raise Prices, Inc.com
However, with solid pricing strategies you can maximize results and find untapped profits hiding in your business.
Most of you don’t charge enough and you’re STILL doing things for free. Stop it!
Do your research and create a pricing strategy that works. Keep in mind that people will buy at your best price if the perceived value is there. (And don’t forget to deliver on that value!)
So here’s my tip for you today…
- Create proper pricing strategies for your products and services
- Package your knowledge and information to increase value
If you’re not doing these two things, you’re leaving money on the table.
What’s your pricing strategy? Do you have one?