Sep 18 2009
Price Marketing Tips For Small Business
Price Marketing Tips For Small Business – Price is a key determinant in the decision making process customers use to purchase your products or services as well as a key element in determining the profitability of your business. Pricing for products or services that appeal to your target market and encourage them to buy because it is an important part of your business and marketing strategies.
Before determining your pricing strategy for your business, it is important to consider the following:
- Your Customers
an effective marketing strategy begins and ends with your customers. It is therefore important to determine how much customers are willing to pay for your products or services, how your customers are sensitive to price changes and how the discount will affect the level of demand and profitability of your business.
- Product or Service Features and Benefits
Unless you have a product or service that offers a unique advantage or extra, and you can communicate quite profitable for your target market, if your price is too high, you may price yourself out of the market. View features and benefits of your product or service offers and how they compare with your competitors. Remember the benefits you provide may be physical, emotional or both. For example, some customers may see higher prices as the equivalent of high quality and is therefore willing to pay a premium.
- Cost of Doing Business
Before setting your prices, you need to determine what your small business must charge for products or services in order for you to create and sustain profitability. Look at what cost and expense of doing business and what price you will need to sell on to ensure these costs will be discussed. Unless you have a sustainable cost advantage, if your price is too low, your sales volume may not generate enough revenue to cover costs associated with your business.
- Market and Your Competitors
your competitors play an important role when setting your pricing strategy. For example, there may be the closest competitors where customers can compare prices so you may need to adjust prices. If it is difficult for customers to compare prices you may be able to charge a premium.
- Distribution Channels
Some customers may expect to pay different prices for products or services depends on the distribution channels they use. For example, if a customer purchases a product via the internet or by post they may expect to pay lower prices due to the elimination of the middle of the retailer.
- Life Cycle of Your Product or Service
At different stages of the life cycle of a product or service you can change your pricing strategy to suite your business needs. For example, when you launch new products or services you may adopt a strategy of low price to encourage trial and repurchase your products / services on a regular basis. Or if your product or service has a unique point of difference in production costs are high or you may charge a premium over your competitors. As a product or service you grow in awareness and credibility of your customers may be able to sustain price increases. Or as increasing sales, your production costs can be reduced and you can deliver some savings or price reduction offer regular promotions.