Three pricing tips for your small business pricing strategy.
What’s the right price for your product’s or services? When’s the best time to talk price? These are two of the age old and important questions for successful small business-to-business marketing.
What’s the right price for your product’s or services?
Some say, always have the lowest price, or always have a competitive price; other’s say, always have the highest price. Therefore what is the best pricing strategy? The best pricing strategy for your company requires a customized analysis. There is no single pat answer.
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First, establishing pricing is best arrived at from the development of a pricing strategy that reflects your market positioning for your products or services and is confirmed by customer acceptance.
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Second, a competitive price means nothing to your customer. All that a competitive price really means is that you are pricing your products or services within a range of your competitor(s).
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Third, the optimum price for your products and services cannot just be arbitrarily set, it needs to be tested and ultimately lies in the value perception of your customer.
Price Does Not = Cost
Price does not necessarily equal cost. The real cost of your product or service involves more than a price in the mind of your customers. It involves other psychological factors that come into play in the purchase process. These factors come into play both off-line and on-line selling. Things like:
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Are you confusing your prospects about what you are offering them?
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Are you presenting your products/services in a logical and easy to understand manner either written or verbal?
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Have you reduced your request for action by your sales prospect to a single action?
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Have you minimized your prospect’s fear of the purchase process?
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Does your product/service solution reduce the difficulty of their current solution and have the functionality your prospect needs or wants?
Reducing the sales prospects anxiety over making a purchase is key to obtaining the optimum price for your products or services.
When to present your price to your customer is also as important as learning what specific price allows you to maximize sales.
When’s the best time to talk price?
The best time to talk price is when you have established the highest perceived value of your product or service with a potential buyer. Offline done correctly, prospective clients will ask you the price for your services. This comes when you have sufficiently established the value of your products or services.
Online the best time to display your price is also after establishing the highest perceived value of your product or service. In either case price may be a perceived as a positive or a negative aspect of the purchase. It all depends on how you position your price and the perception of that positioning by your potential customers.
One of the ways of making your price a positive is to position your price as a perceived value as a savings. Example our price $1,495 a $1,200 savings over… our regular price, already discounted price or if purchased separately. The lesson here is that by enhancing the perceived value of how you introduce or display your price is as important your total offer in creating a price positive perception.
There are times depending upon the specifics of what you are selling that customers anticipate an immediate disclosure of price. Sometimes by not exposing your pricing up front, it may cause buyer anxiety, if they feel they are being handled by avoiding to state a price to them quickly.
Takeaway:
Optimizing pricing requires understanding what a customer will pay for your products or services and is not your price, but what customers perceive as the value of your products or services. To achieve your optimum pricing you will need to test your pricing and make pricing a positive attribute to your overall product/service offer.