Regular sales are vital for your business so encouraging your customers to continue to buy from you should be top of your list.
So how can you ensure your products and services remain keenly priced and relevant to your market?
Calculate your costs. Before you consider raising or lowering prices, review the costs involved in producing your goods or services. Look at everything from manufacturing and marketing to insurance and salaries. Assess if the prices you’re charging will make decent margins — anything between 20–40 per cent above cost value is regarded as a good return.
Consider the competition. Research your competitors regularly. Find out who’s offering similar products and services and the prices charged. Check websites, talk to suppliers — even invest time in mystery shopper surveys. This enables you to assess if your prices are right for the market and if your products are being merchandised effectively to maximise sales
Think of a number. An “easy” price like £25 sounds a lot more acceptable than £26.15. Are you looking for an impulse purchase or a considered choice and what does this say about your product? Are you aiming for bargain hunters or the top end of the market?
Make a loss. Well, not exactly. A “loss leader” — a product not in itself profitable, but that draws customers — is a well established competitive pricing tactic. Increased sales of pricier offerings effectively offset the loss.
Be unique. Don’t lose sight of what makes your offering special. There may be many different muesli brands out there, but if customers like your particular recipe chances are they’ll pay a little more to keep enjoying it. Loyalty has a price.
Don’t discount discounts. It’s a risky strategy but worth it if you want to generate a buzz by encouraging large orders — especially for products or services new to market. Don’t throw in too many incentives; you’ll only eat into your profit and risk betraying a lack of faith in the original proposition.
Location, location, location. Varying prices according to where your products are available is a tactic beloved of supermarkets, and not without merit. One reason given is that customers pay extra for the convenience and it’s a price many are prepared to pay.
Target your market. Consider adapting products to suit the needs of particular customer groups. This might involve offering economy, standard and premium versions. Such an approach (market segmentation) can build loyalty and see customers progress to higher price points as their circumstances and needs change.
The cost of credibility. While the value of your products matters hugely, as a business you should also consider the value of those whom you serve. Consider offering joint promotions and share publicity with businesses you’d like to be associated with. Respect can pay dividends.
How would you like to pay? Sometimes, the method of payment is as critical as being competitively priced. Offering agreed time periods in which to settle a balance is one way to incentivise purchases, particularly on high cost items. Allowing payments to be made online or by telephone are standard options any business should offer.