7 PRICING STRATEGIES TO ATTRACT CUSTOMERS || SERIES 2

There are several ways you can price your products, and you may find that some work better than others — depending on your market.

Here are seven common strategies that many new businesses use to attract customers.

1. PRICE SKIMMING

Price Skimming involves setting high prices when a product is introduced and then gradually lowering the price as more competitors start entering the market. This type of pricing strategy is ideal for businesses that are entering emerging markets, that is, they are the first to enter the market, or launch the products or services.

It gives businesses the opportunity to capitalize on early adopters and then undercut future competitors as they join an already-developed market.

2. MARKET PENETRATION PRICING

This strategy is essentially the opposite of price skimming. In Market Penetration Pricing, instead of starting high and slowly lowering prices, you take over an already saturated market by undercutting your competitors with lower price. Once you develop a reliable customer base, you gradually raise prices.

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There are some factors to consider before deciding on this strategy, like your business’s ability to potentially take losses upfront to establish a strong footing in a market. It is also very important to develop a loyal customer base, which can require other marketing and branding strategies.

3. PREMIUM PRICING

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Premium pricing strategy is for businesses that create high-quality products or services and market them to high-income earners. The secret to this pricing strategy is to develop a product that is high quality and that customers will consider to be high value. Good example is the iphone from Apple.

4. ECONOMY PRICING

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An economy pricing strategy will involves targeting customers who want to save as much money as possible on whatever goods or services they’re purchasing. Like premium pricing, adopting an economy pricing model will depend on your overhead costs and the overall value of your product.

5. BUNDLE PRICING

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In this strategy, companies pair several products together and sell them for less money than each would be individually. This strategy is a good way to move a lot of inventory quickly. A successful bundle pricing strategy involves making profits on low-value items to outweigh losses on high-value items included in a bundle.

6. VALUE-BASED PRICING

Value-based pricing is almost similar to premium pricing. However, In this strategy, a company bases its pricing on how much the customer believes the product is worth. It is best for businesses who offer unique products, rather than commodities. Commodities are products that you can't really differentiate yours from competitors'.

It might be hard to get an exact price that customers would want to pay for your products. But through some techniques, you can understand customer's perspective. You can as well ask for customer feedback during the product development phase.

7. DYNAMIC PRICING

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Dynamic pricing strategy allows you to change the price of your products or services based on the market demand at any given moment. Uber’s pricing strategy is a good example of dynamic pricing. During low periods, it can be quite an affordable option. But, whenever a rainstorm hits during the morning rush hours, the price of an Uber will skyrocket, given that demand is also likely to rise. Smaller businesses can do this too, depending on seasonal demand for your product or service.

Which pricing strategy is right for your business?

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