Small Business Pricing Strategies

Small business pricing strategy is a key marketing decision as one of the four “Ps” of the marketing mix, (Product, Pricing, Promotion and Place). It is integral to your product/service marketing because it affects other marketing mix components including, sales promotion and channel distribution decisions (Place). Therefore, your decisions regarding the pricing strategies you employ are crucial to producing a profitable bottom line.

Also, having positive and negative effects on your customers, your pricing strategy affects the perceived value of your product/services. If you price your products too low, they may appear too cheap. Price too high and the perception of quality may suffer, or customers may buy a better perceived  price-valve alternative from competitors.

It is usually wise to employ several pricing strategies at one time. The specific types and methods of small business pricing strategies you will need to take into account depend on the overall marketing objectives of your company. It is also important to keep in mind, that a successful small business pricing strategy is not conceived in a vacuum, but is formulated to be part of a profitable overall product/service mix pricing strategy.

Most pricing methods emanate from business to consumer marketing, (B2C) companies and may not be appropriate for consultative business to business marketing, (B2B) firms . Developing your small business pricing strategy and knowing which pricing methodologies to utilize may require substantial trial and error without the help of a marketing professional.

How to Establish a Pricing Strategy

1. Consider working with a professional marketer

2. Do your homework and gather competitor pricing from the marketplace

3. Do not call your competitors for their prices – this is illegal in the US

4. Make careful decisions on the pricing strategy and methods best suited for your B2B marketing efforts

There are three major types of pricing strategies used by most businesses usually in combination. There are aslo many types of subset strategies within each of the major categories of pricing strategy. Because there are so many options it is wise to do your homework before jumping to any conclusion on just what your pricing strategy should be for your small business. The key factors that impact the appropriate pricing strategy are:

• Industry
• Market Segment
• Marketing Objectives
• Distribution Channels
• Customer Base
• Competitive Situtation

All these play a vital role in determing your small business pricing strategy. To get started the following links will discuss and overview the major pricing strategies for your consideration in establishing your pricing strategy.

Standard Pricing Methodologies

Promotional & Discounting Pricing Methods

New Product/Service Pricing Methods