Dan Radak, World Executives Digest | To a lot of people, the process of pricing a product seems quite simple. All you need to do is count how much it costs you to produce or purchase it, determine a break-even point, and then see how low your prices can go. Unfortunately, there is much more to pricing than that. What you need to keep in mind is that prices need to be constantly adjusted, which is why you should also think about employing the right pricing strategy. Here are four additional things you should consider in order to make your prices more competitive.
Focus on quality
If someone offered you a random smartphone from a brand you have never heard of before for $100, you would assume that it’s a good deal. On the other hand, if someone offered you the latest iPhone for five times that amount, you would be ecstatic about the deal you are about to make. In other words, making your price lower isn’t the only way to make it competitive. By focusing on the quality, you can perhaps persuade your customers that they are getting much more in terms of features, durability and performance from you than from your competitors, for a similar or slightly higher price.
Reduce your own overhead
In the introduction, we mentioned that your price can only go as low as your overhead allows it. However, can your overhead go any lower? When it comes to production, you could perhaps try to renegotiate the deal with your materials supplier. In a situation where the materials or products themselves are being imported from an overseas supplier, you could reduce your overhead by exploring more convenient freight management systems and incorporating them into your business structure. In this way, you get a more reliable infrastructure, which allows you larger maneuvering space when it comes to the price.
Try being honest
A lot of companies make an attempt to captivate the attention of their target audience by offering them a price that seems too low to be true. As it happens, it usually is. In order to achieve this unrealistically low figure, they often exclude tax, the shipping cost or even deliberately sell items without extra features or follow-up gear. Nonetheless, in 2017 most online buyers know exactly what to expect from such deals, which is why being honest might turn out to be a deal-breaker in your favor. All you have to do is offer the full price of a product without any hidden costs, and you might start building a trust-based relationship with your clients.
Comparatively lower prices
One of the most common tricks that some companies are known to employ is deliberately launching an incredibly expensive product as a comparison tool. In this way, they have two similar products, and while the cheaper one may still be overpriced, it seems comparatively inexpensive when standing next to its more luxurious counterpart. This is only a part of what is known as psychological pricing. Of course, this would require launching a whole new product as a mere decoy, but this method has been known to work both online and in traditional retail.
At the end of the day, it is more than clear, that in order for your prices to be competitive, you don’t actually have to lower them by all means. All you have to do is play around the expectations of your customers and persuade them that your product is indeed worth its price. Seeing as how everyone wants to beat the system, it shouldn’t even be that hard to convince them that they are actually ripping you off by making this deal.
Dan Radak is a marketing professional with eleven years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.