For all your online business building info! , 2020-02-23 18:00:24
Top 8 Small Business Pricing Strategies
Every business that wants to make money — online or not — need to have some type of pricing strategy that they use on there business site. The best business pricing strategies are those strategies that play on the human behaviour. Below you’ll find 8 top small business pricing strategies.
1. Nine and Zero Effect
The numbers that you use in a price are very important, because people associate specific number with certain values. For instance people associated the number zero with quality and number nine with value. So if you say the product cost $9.99 then people will think in the back of their mind that it is of value. This is just human behaviour. The psychology of pricing is very important as you can see; you say something different with a $9.99 price or $10 price on the same product. Think about what you are trying to communicate (value or quality) when you are pricing your next product.
2. Prestige Pricing
High prices suggest that the product is of higher quality. Of course, this doesn’t have to be the case, but in people minds this works that way. The coffee of for example Starbucks has a higher perceived value than a cup from a coffee stand on the corner. Only because they have improved the packaging and delivery of the product you can justify a higher price than a normal coffee.
3. Multi-payments to Promote Satisfaction
Everyone knows this one; you pay in full for a one year membership on a service or product (like a gym membership or on a magazine.) The first month you will make frequently use of your membership, because you’ve payed for it (it’s satisfying to make use of something you already have payed for.) But after one or two months you slowly make less use of the product or service, because you’ll perceive the item as free (although you paid already for a whole year!) So if you want people to make frequently use of your product or service you’re better off charging monthly payments rather than a one time fee.
4. Anchor Pricing
People that look for something — in a supermarket for instance — often use known brands or labels to find a specific product check out this site. These often high priced products are used as an anchor to find a specific product. Supermarkets know this. This is why they place private label brands close to the branded product.
5. Quantity Pricing
Consumers are receptive to purchasing items in suggested quantities, such offers typically reads something like the following “Get 2 for the price of 1!” or “3 for only $9.99!” Give people a good or attractive price and they will eat out of your hand!
6. Payment Steps
A good pricing strategy is to offer your customers multiple payment steps for a product. For instance the price of one product is $50. You could say for example that they can pay in 5 payments of $10 or in two steps of $25. The customer will perceive a lower price to no loss for you.
7. Bundling Products
A good way to convey value is to bundle multiple products and sell it as one product. For instance you have a new product. You bundle it with an older product or a product that could be used with your new product (but is of less value than the main product.) Many TV infomercials use this in their strategy (Buy this product. But wait there’s more!! You also get product X for free!)
8. People Love a Bargain
Most people look for a bargain if they want to buy a certain product. This is why most shops use large banners or billboards to announce large discounts on certain products. People love to feel like they have made a great deal! So selling below the common price will make them feel good and makes you money!
If you want to make money — online or not — by selling you own products or service then it is vital that you choose the right pricing strategy or strategies (you can for instance use multiple strategies described above in your web-shop.)
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