How do you price your products?
This is one of the most important decisions you have to make when bringing a new product to market.
How you set your prices plays a major role in how much you sell.
It also gives you a way to set your offerings apart from the competition.
You can also customise your products to your customers’ preferences.
Here are 6 ideas for charging more than just the standard price.
1. Package Pricing
Package pricing offers different levels for the customer to choose from.
A Basic Level price might offer a simple version of the product without any bells and whistles.
Meanwhile the Gold Level offers every feature, priority support, and extra goodies.
Your customer gets the option to pay what they’d like for the product and enjoy only the features they need.
2. Use Pricing to Position Yourself as a Luxury Brand
The standard logic of pricing is that undercutting the competition increases your sales.
While this is usually true, another strategy is the exact opposite.
You can charge more than your competitors, and really drive home in your marketing the unique benefits only your product can offer.
This way, you position yourself as a more advanced version.
It takes a bit more effort on your part in positioning your products in the market, but you’ll earn more per unit sold.
3. Decoy Pricing
In this pricing strategy you set your product price slightly higher than you expect your customers to pay.
Some customers will pay your asking price, but then you can offer sales and deals when you want to move units.
If you price is higher than you need to charge, you can offer discounts to influence buyer behaviour.
Offer your prospects a discount when they share your product on social media or join your email list.
The secret to this strategy is that the sale price is actually your target price.
4. The Freemium Model
Very common in the Software As A Service (SAAS) market is to offer a free and premium version of your product.
The free version has very limited features and is designed to give the customer a taste of what the premium version offers.
This strategy works well for apps and online services, but it can work for almost any business.
It’s especially effective where the basic product is cheap to produce in volume.
While they enjoy the free version of your product, your customer comes to understand the value of the premium version.
As soon as they need one of those extra features, they will upgrades.
5. Bundling
My most effective pricing strategy, especially for securing first-time customers, is creating a bundled or “stack” offer.
This is when you take a group of products from which your customers would benefit and sell them together as a bundle for a discounted price.
With the bundle, the customer gets each individual product at far below its individual price.
The trick to selling using this pricing strategy is to build up the bundle.
As you go through the sale, you list out and describe each individual product.
When you add each product to the list you state the price for each individual product and update the grand total.
Once you have finished listing the individual products you give the ‘final’ total.
Then you hit them with the offer by revealing the discounted price for the entire bundle.
Just like decoy pricing, your target price can be the bundle price.
Bundling in this way can be a powerful influence on buyer behaviour.
6. Dynamic Pricing
Airlines, hotels and other businesses in the travel industry use dynamic pricing.
The price goes up during high volume buying seasons and down during the off-season.
Dynamic pricing helps you drive more sales during times when you don’t usually sell a great deal.
Most big companies use algorithms to set prices automatically, sometimes varying even minute by minute.
While you may not get that detailed, you can still adjust your pricing to hit your goals and get maximum profit.
This is just a taste of the creative pricing ideas businesses use.
These strategies offer more flexibility for you and your customers and can help you sell more.
Consider and try some of these outside-the-box ideas and see what works for you.
Do you want to learn more about setting the right price for your products?
Over the next few weeks I will be writing a series of articles on this vital business skill.
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