As a small business, even the small advantages can help in a big way. A larger business doesn’t have to make every dollar count, though doing so is still prudent, as it will probably have little impact on their bottom line. Your businesses performance will be based on how you price your products, so take advantage of as many of these strategies as you can.
While pricing is generally literal, the human mind does have some impact on how we see that pricing. As many pundits like to point out, people buy on value they are getting from your product/service more than what they are paying. Making your prices standout visually, helps differentiate the new price from the old one. Using a different font or changing the colour of the sale price can garner more sales because the customer’s mind instantly realizes that something is special about it.
The human mind works in mysterious ways, and sees $49.99 and $50.00 differently, even though it’s only a penny different. The former price looks like it’s a dollar cheaper since it starts with 4, while the latter figure starts with 5. Combine that with a price that ends with 9, and you end up producing more sales. Using pricing that ends with 9 makes people believe that you’re cheaper, and that lower first number endorses that.
Pricing isn’t always about being cheaper than the other offering. Many times, people associate a higher price as a gauge of quality, and this can be to your benefit. You can use this to your advantage by offering two or three versions of similar quality of your product or service, and each progressively more expensive. Customers generally opt for the more expensive one when two are offered, and take the middle one when three are offered.
Everyone loves a good deal, however small business is wary of giving away the farm, so to speak, with too cheap pricing. When you start giving deals, and get carried away, you have less money for which to grow. BOGO pricing, or Buy One Get One, can be worth doing as people are far more likely to buy.
Let’s face people are a little greedy, and when they feel they’re getting a great deal, they emphasize the possible value. It becomes not about whether it’s actually a good purchase, but about getting more than they think they should for that price. Also, offering discounts on future purchase can work too.
You can play on prestige rather than greed. Pricing according to prestige numbers, such as 50 or 100, can create sales simply because it feels right. Flat numbers are more easily managed mentally, and suggest security. Your customer isn’t juggling numbers to see if it’s a deal; they get exactly what they want at the price they anticipate.
Your business may live and die by your pricing strategy. You set up your pricing based on your product’s or service’s value; however, your customer doesn’t care what you think your price should be. They only care about WII-FM (what’s in it for me). Once you understand that, the sooner you can chose your pricing strategy.
What is Inventory and why is it Important to your Business?
What is the Difference Between Office Supplies and Office Expenses on Your Business Taxes
When Should the Holiday Shopping Season Start?
Could you be Defined by the CRA as a Personal Services Corporation?
Ideas for a Halloween Business
The Top Mistakes New Freelancers Make
Five Skills You Need to Learn Before Starting Your Own Business
Does Your Small Business Need a Consultant?