19+How+do+you+go+about+setting+a+pricing+strategy

How do you go about setting a pricing strategy?

Poor planning leads to poor performance, and that is why price sends a lot of messages and is used by consumers and buyers to assist them in positioning a brand in their minds.

When we plan pricing carefully, spend time understanding the potential consumer and studying the competition are good ways to set competitiveness.

Key questions when setting pricing strategy are:

Are you creating a new sector?

Who are your target audience?

What do they currently use or might they compare your offering with?

What advantages/benefits do you offer?

Do consumers value those advantages and see them as worth changing for?

Where will they be able to purchase the product or service?

Who are the competitors?

What price do they charge?

What differences do you offer in comparison with the competition?

Is the market growing or is it a well-established static market?

Is purchase likely to be repeated?

Are there consumables attached to the product?

What risk are consumers taking in choosing your product or service? (Should they be offered guarantees or reassurances?)

By answering these questions, it is possible to get a better understanding of where a product or service fits into the market.

These questions should be viewed as part of broader strategic review of the brand, product range or business.

A summary of pricing strategies

All businesses can draw from a number of alternative pricing strategies.

Penetration: setting a low price to increase sales and market share

Milking: setting an initial high price and then slowly lowering the price to make the product available to a wider market, thus milking profits from the market layer by layer

Premium: setting price high to reflect the exclusiveness of the product

Competition: setting a price in comparison with competitors

Product line: pricing different products within the same product range at different price points

Bundle: offering a group of products at a reduced price

Psychological: considering the psychology of price and the positioning of price within the market place: for example, charging $0.99 cents instead of $ 1 dollar

Optional: offering optional extras along with the product to maximize revenue (used commonly within the car industry).