Pitfalls of Pricing Strategies

Do You Have an Effective Pricing Strategy?

Our past couple of blogs have addressed the need for defining your 4 P's of marketing.  The first "P" discussed in our last blog was the "Product" (or service) "P".

As mentioned in our previous blog, the 4 P's of marketing are:

  • Product/Service
  • Pricing
  • Promotion
  • Placement/Positioning

Let's discuss the second P, "Pricing".

This is a very important "P" of your marketing plan.  Price your product/service too high and no one will buy it.  Price it too low and no one will think it has value, or worse yet, they may think it is not a quality product or service.

Avoid pricing pitfalls by asking some questions:

  1. What is the competition charging for this? Competitive shop if you need.
  2. What is the perceived value of this product/service?
  3. What are some pricing strategies I can use to encourage repeat business?
  4. Can it be packaged with another product or service to encourage add-on sales?
  5. Should I offer discounts? If so, how will they work?
  6. Will my price be competitive and offer me a good profit margin?

Pricing strategy is not as simple as setting the price you want to get for your product/service.  As in the product "P", market research in the form of competitive shops, surveys, focus groups, etc. may be required. 

 When developing a pricing strategy, work with someone who understands it well.

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