Get It Right – Pricing Strategies That Work
If you’re not exactly sure which pricing strategy will work for your business, these 6 steps can help you successfully set your company’s prices.
By Dileep Rao Clinical Professor, Florida International University
Many entrepreneurs hope for success by offering low prices. World-class entrepreneurs succeed by setting higher prices. I interviewed 23 hundred-million-dollar and five billion-dollar entrepreneurs, and found that 50 percent of these world-class entrepreneurs succeeded with higher prices by offering more value and knowing how to sell that value. An additional 25 percent excelled in merchandising—they used the high-low pricing strategy (or high-free in industries such as the Internet) where they priced low on a few items to attract consumers and priced high on others to earn an attractive profit. So if your strategy is to succeed by pricing low, please think again. Pricing is the heart of a business. It affects everything you do and is affected by everything you do. Economists talk of supply and demand as key factors behind pricing—successful entrepreneurs manipulate demand by making their products more desirable. The right price should fall between your cost and the value you offer to customers. Within this range, your prices should be closer to the value of what you’re selling. So to price high, add value, then learn to sell value.
The following six steps will help you determine the right price for your product or service:
-1- Understand Your Customers’ Unmet Needs and the Value You Offer. Your pricing potential is related to the value added for your customers, and their willingness and ability to pay. Products with more features and benefits can be priced higher. ……………..
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