{"id":9225,"date":"2019-09-09T16:50:13","date_gmt":"2019-09-09T13:50:13","guid":{"rendered":"https:\/\/www.become.co\/blog\/?p=9225"},"modified":"2021-01-20T16:49:55","modified_gmt":"2021-01-20T14:49:55","slug":"guide-to-pricing-strategies","status":"publish","type":"post","link":"https:\/\/www.become.co\/blog\/guide-to-pricing-strategies\/","title":{"rendered":"The Ultimate Guide to Pricing Strategies"},"content":{"rendered":"\n

\u00a0<\/h4>\n

Learn how to set a product pricing strategy that will drive revenue and increase your profits.<\/strong><\/h4>\n

Remember the story of Goldilocks and the three bears? She might have been onto something, even though her story didn\u2019t end so well.<\/span><\/p>\n

As a business owner, you\u2019re well aware of the issues that can result from poor pricing strategies. Price things too expensively and customers won\u2019t purchase from you. Too cheap and your cash flow will suffer.<\/span><\/p>\n

How can you perfect your pricing methods so that you stay in the comfortable \u2018Goldilocks zone\u2019 in the middle?<\/span><\/p>\n

Find out as we break down the essentials of product pricing strategies below!<\/span><\/p>\n\n

What is a pricing strategy?<\/span><\/h2>\n

A pricing strategy is a methodology that a business uses when ascribing the cost for their products or services.<\/span><\/p>\n

There are three fundamentally different pricing strategies:<\/b><\/p>\n

    \n
  1. Set the price above your competition<\/span><\/li>\n
  2. Set the price the same as your competition<\/span><\/li>\n
  3. Set the price below your competition<\/span><\/li>\n<\/ol>\n\n

    When you choose to make your prices more expensive than your competition, it\u2019ll mean two things. First, it may allow you to make more money than the competition. But, secondly, it\u2019ll require you to offer better features or terms than your competitors. It goes without saying that customers won\u2019t be very likely to pay more for the same service. You\u2019ll need to be better than your competitors if your pricing strategy will mean higher prices than the competition.<\/span><\/p>\n

    On the other hand, a competitive pricing strategy that has your goods or services coming out as more affordable than your competitors may seem counter-intuitive since your profits might take a hit. But, the reason you may want to use pricing methods like that is that an attractive price on a product may get customers through the door where other, more expensive goods or services can be offered.<\/span><\/p>\n

    Finally, product pricing strategies that place yourself in line with your competitors are useful if you\u2019re able to make up for the likeness with a unique marketing strategy. For example, <\/span>social media marketing<\/span><\/a> allows for a great degree of individuality to be expressed, which can help you stand apart from the crowd even if the goods you\u2019re selling are comparable to your competition.<\/span><\/p>\n\n

    How does pricing affect the marketing mix?<\/span><\/h2>\n

    The marketing mix is a basis for creating a business model and is composed of what are referred to as the \u20184 Ps\u2019.<\/span><\/p>\n

    The 4 Ps are:<\/b><\/p>\n

      \n
    1. Product<\/span><\/li>\n
    2. Price<\/span><\/li>\n
    3. Place<\/span><\/li>\n
    4. Promotion<\/span><\/li>\n<\/ol>\n\n

      For the sake of this article, we\u2019ll focus on the second \u2018P\u2019 – price. In relation to the overall scheme of the marketing mix, the price factor can refer to several concepts. Yes, it relates to the monetary cost that customers pay in order to obtain what you’re selling. But it also might refer to the secondary costs that customers will have to pay such as the time taken to make the purchase, the amount of effort it takes to complete the transaction, the lost opportunity of earning money during that period of time, and so on.<\/span><\/p>\n

      Besides the actual costs involved, you must also consider the perception of value that customers hold with respect to your goods or services. It\u2019s not just about the dollar amount or the other losses that customers may or may not be willing to take to make the purchase. A pricing strategy must also be shaped around the way customers view your value in comparison to the rest of the market.<\/span><\/p>\n

      \"\"<\/p>\n\n

      What does all of that have to do with the rest of the marketing mix?<\/b><\/p>\n

      All four factors in the marketing mix are interrelated. The pricing strategy you choose for your business will ultimately affect and be affected by the other three factors.<\/span><\/p>\n