Firms need to be using pricing strategies that actually work if they would like their items and services to be purchased and see their profits grow.
As a result, they need to be taking into consideration a variety of aspects like the prices that their rivals are offering, how much it is to produce the products, the cost of distribution, along with figure out where their target audience is located, among many other things.
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Once the following has been determined, firms must select a pricing strategy that caters best to what has been outlined. Down below, you will find some of the more common pricing strategies that you may find useful.
1] Penetration Pricing
This is a great strategy to use if you are looking to get a much bigger market share as you will be making the prices of your items and your services lower than that of the rest of the market.
After all, you are probably looking to really get your items out there in order to boost the awareness across your audience as well as encourage shoppers to actually try them out.
While, in the beginning, it may cause the firm to see some losses, in the long term, you will have penetrated the market on a much deeper level, therefore, allowing you to increase your prices later on and seeing more profits roll in.
2] Premium Pricing
Premium pricing strategies are used whenever firms are launching a new item that has clear benefits over other items currently available on the market. As a result, the item has a price that is greater than that of everyone else’s.
In addition, companies will see the most success with this strategy whenever they first introduce the item, especially those companies that are smaller which sell items that differ from others.
And In order to accomplish such properly, though, you need to make sure that you make an image in the heads of your shoppers so that their perceived value of the item is very high, thus justifying the greater prices.
In addition, you will want to make sure that your marketing campaigns emulate that same level of prestige along with the packaging and even the look of your store.
3] Price Skimming
In the price skimming method, you need to establish prices that are much higher by launching new items at a time when the market is not very saturated whatsoever.
Through this strategy, companies are able to make the most money possible before they end up having to deal with the onset of new rivals that are coming into the market. It is at this time when the prices begin to get lower.
4] Bundle Pricing
In this pricing strategy, companies bundle up their items that way they can sell a few items together at a price that is lower than if you ended up purchasing each item on their own.
This is a really good method to use if you have some items in your inventory that are just not getting much interest and yet you really need that stuff to go as it is taking up way too much room.
This is also a great way to get the shoppers to think that they are getting a steal based on the price that they are paying. It is especially useful for those firms that have complementary items such as a restaurant offering to give a free dessert if you purchase a meal during a specific day.
5] Economy Pricing
In this case, you will begin by setting your prices as low as they can go, thus resulting in very little profits. This way, though, you will not be spending as much on both marketing and promotions. In order to see the best results, you need to sell as many items or services as possible at a fairly low price.
Take, for instance, Walmart, they utilize the low-price method which makes it difficult for smaller companies to sell the number of items that they need at a price just as low.
6] Psychological Pricing
Companies use this pricing method when they are trying to get shoppers to purchase their items on the basis of their emotions instead of through rational thinking.
A good example of this is the left-digit effect, which is when firms price their items at $2.99 rather than $3.00. Despite the fact that there is hardly a difference between the two, shoppers believe that $2.99 is a whole lot less.
While we have only listed a few of the top ones, this is a great list to begin your search as you can use these strategies and branch off of them in order to create one that fits your needs the best. It is important, however, that you really analyze every aspect of your firm first before making a decision.
