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Price is something that greatly influences how likely someone is to purchase your products and services. Even the best items may be passed by customers in exchange for something that offers comparable functionality without as hefty of a price tag.

The trick is discovering what that perfect price is. You don’t want to sell your items short, nor do you want to overprice them so that no one purchases them.

Let’s examine five pricing strategies designed to make your products sell easily while ensuring that you maintain a clear profit margin.

Base Price Around Cost

The most basic type of pricing strategy requires you to base the price of something around the cost of creating a product or providing a service.

Your price should include:

  • The cost of materials
  • Any costs associated with labor
  • Overhead such as taxes, insurance and marketing

The drawback of this pricing strategy is that it relies upon the cost of creating a product. It does not necessarily price your product in accordance with what your customers think of your product. Competitors capable of using cheaper methods for production may also be able to undercut your prices.

Look at the Competition

The competition likely has products and services that are similar to yours. Basing your price around what your competitors price their items at may be a wise decision, especially when customers in that industry are used to that pricing.

When using this strategy, ensure that you price your items in a way that allows you to reach as many potential buyers as possible. Your goal is to compete with the competition by expanding your reach, which will help you price future products in more favorable ways.

Price Twice

Front-end, back-end and tiered pricing plans allow you to offer two different prices. You can allow customers to purchase products individually or as one-time deals, and you can encourage multiple sales by offering lowered prices for repeat customers.

This pricing plan is designed to sell multiple products at one time or to encourage customer loyalty. You may be able to charge slightly higher prices for your products than what the competition charges while taking advantage of things like the economics of scale.

Consider a company that sells e-books designed to help online marketers. The company may price individual books between $40 to $80 each. They may offer an entire course of related products, which would include 4-10 products, for a flat fee of $100 to $150. They may attempt to sell to previous customers e-books for a lower price.

Companies offering multiple products that are similar, as packaged deals, or in the form of subscriptions will find this strategy the most effective.

This pricing plan is designed to sell multiple products at one time or to encourage customer loyalty. You may be able to charge slightly higher prices for your products than what the competition charges while taking advantage of things like the economics of scale.

Use Psychology

Price is arbitrary. While factors like the cost of creating something can influence it, the ultimate worth of any given product is decided by what someone finds as an attractive price. 

By using smart pricing psychologies, it means you’re using the customer’s emotional response to generate sales. There are number of studies show that by integrating psychological pricing structure with other pricing tactics and adjusting your pricing strategy a little bit could improve your sales.

Price Around Customer Feedback

Your company might offer something revolutionary or truly unique. Basing your price around the cost of the product or what similar products cost may be a mistake, as you may be underselling what your product is worth.

One strategy that avoids this is one based upon what your customers think about your product. While you must ask for their feedback, this can allow you to determine the most profitable price for a unique item.

You may be surprised at how much your customers want to pay for your product. Studies have shown that some will pay 20 to 25 percent more than what a company would charge for a product or service.

Pricing a Product Perfectly

While it takes a significant amount of work, luck or intuition to perfectly price a product, finding that price is worth the effort. You may be able to price your product in a way that results in significantly more profits than you would see otherwise.

The one thing to keep in mind is that no perfect price remains that way for long. Consumers’ opinions, the price of competitor products and services, and factors like inflation make that perfect price fluctuate.