To determine the right product pricing strategy of your small business products or services is important to make healthy profit as well as the price is important factor for brand of such product or service. The first thing to do to create successful product pricing strategy is understanding about the psychology of price. Remember that the product price bring huge psychological impact. For instance, if you pay more for such product, you will expect more benefit than other cheaper product. That means price and quality has direct correlation for building mind set of your costumers.
Products with even number of pricing usually has greater quality than odd numbered price. For instance, a DVD player which is selling for $ 200 can be considered as high end item than selling for $194.99. That’s why the leader of the low cost product is used to label the price with odd number. So it depends your own consideration, to be high or low end items seller and the type of market that you can penetrate.
To determine the optimum product pricing strategy of small business product needs five step process to get optimum profit in selling your product brand
1. The minimum price
You need to know which aspects can affect your actual cost, such as manufacturing cost,insurance, labor, marketing and so on. So you can determine the minimum price for such item that you will sell
2. Your Product Brand
Some products can be sold with less profit but for high volume. It depends on your product band. For instance, the pricing of BMW is higher than VW, but BMW sells fewer products than VW.
3. The competitors
Analyzing competitors’ price will lead you to learn that your product pricing strategy or services can be categorized as superior, inferior or just nearly similar. So you should know whether your competitor seems to be doing better than you, such as location, price or service.
4. Setting optimum Price
By determining the minimum cost and also compare to other competitors, you should know how to set a optimum price of your products or service
5. Doing a test
Just test one price in one store and different price in another store. Compare the results of product pricing strategy.
Sat, May 23, 2009
marketing