Hello, I’m Jim Glover, That Branding Guy, for Once a Day Marketing. We are continuing our series on pricing strategies. Yesterday we discussed four pricing strategies: penetration, skimming, competition and product line. Today we will look at four additional strategies.
Many years ago pricing wasn’t utilized as a marketing ploy. Companies practiced “cost plus” pricing, leveraging financial and accounting data to determine actual and fixed costs, then added a margin. Or, a business may have employed “castles in the air” pricing, charging whatever the market would bear.
The factors that come into play when evaluating pricing strategies are the uniqueness of your product and what your competition is doing.
The first strategy we will discuss is called bundle. In this scenario various products are bundled together and sold at a lower price than the individual items. Supermarkets frequently practice this method. They may advertise bundles of house cleaning products or milk and bread to entice customer to buy additional items.
Next is psychological pricing. Here you determine a price that will be seen favorably in the eyes of your customers. Would a customer be more likely to buy a $1 order of French fries or an order for $0.99? The actual difference in price is negligible but psychologically the two price points are viewed very differently.
Then we have premium. A high price is established to create greater perceived value for the product. Some consumers will gravitate to a high price because they believe they are getting more for their money.
Last we have optional pricing. This strategy may be employed by a car dealer for instance. They offer a base model to which can be added a variety of options. Customers are given the option to add such items as stereos or leather seats to the product for a higher price.
There are numerous pricing strategies available. Determine which are most appropriate for your product and your market. You may want to try different pricing strategies for various target customer segments.
Pricing is the only one of the 7Ps that doesn’t cost anything to implement. Pricing drives your revenue and eventually your profits. It is essential to thoroughly evaluate the process of pricing and impacts to your customers.
That concludes our series on pricing. Stop by tomorrow for Recon Thursday. To discuss an online or face-to-face service engagement and enhance the marketing and branding for your organization, contact James Glover: (505) 501-1330 or email@example.com. I’m Jim Glover, That Branding Guy, for Once a Day Marketing and we’ll see you next time.