TheMiddleShelf.com

Small businesses tend to focus on marketing when launching new products or services.  But a sometimes overlooked strategy can play a key role in profit and success: pricing.

When pricing your products or services, consider these tips to set prices that say value to potential customers and help increase your profitability:

1.  Set prices that capture value.  Set prices that capture the value customers place on a product by thinking like a customer.  Customers evaluate a product and its next best alternative(s) and then ask themselves, “Are the extra bells and whistles worth the price premium or does the discount stripped-down model make sense?”  They choose the product that provides the best deal (prices vs. attributes).

2.  Provide pick-a-plan options.  Customers are often interested in a product but refrain from purchasing simply because the pricing plan does not work for them.  While some want to purchase outright, others may prefer a selling strategy such as renting, leasing, prepaying or all-you-can-eat.  A pick-a-plan strategy activates these dormant customers.

3.  Offer product versions.  Consider offering good, better and best versions.  For example, many gourmet restaurants offer early-bird, regular and chef’s table options.  Price-sensitive foodies come for the early-bird specials, while well-heeled diners willingly pay the extra $$ to sit at the chef’s table.

4.  Consider differential pricing.  For any product, some customers are willing to pay  more than others.  Consider tactics that offer discounts to price-sensitive customers, such as a coupon program.

Companies should think of their potential customer base as a giant jigsaw puzzle.  Each new pricing tactic adds another customer-segment price to the puzzle.