Pricing is about two things: the economic transaction and a statement of value. Pricing influences customers’ perception and view of quality. A high price can reassure customers about quality and may actually increase sales.
If you find you have to drop your prices or change your product to what rivals offer, it probably means you’re dealing with the wrong kind of customers. Instead, find the right customers – the ones who are prepared to pay the full price for what you can uniquely offer. We need to focus our businesses on things we can do that rivals cannot. This will enable us to increase prices – with the right kind of customers.
Only when we fully understand how valuable the benefits of our products are to the customer can we price accordingly.
Sections
Introduction
Pricing is about two things: the economic transaction and a statement of value. Pricing influences customers’ perception and view of quality. A high price can reassure customers about quality and may actually increase sales. The issues covered in the sections of this toolkit are interconnected. To make the most of the toolkit use all of them. You can deal with them in any order.
You don’t have to Sell Cheap or Sell Out
If you find you have to drop your prices or change your product to what others can do, it probably means you’re dealing with the wrong kind of customers. Instead, find the right customers who are prepared to pay the full price for what you can uniquely offer.
Increase Prices – to Lose Customers!
An imposed increase in prices would mean losing some customers – but only those who can go to cheaper rivals. We need to focus our business on things we can do that rivals can’t, which enables us to increase prices – with the right kind of customers.
How to Calculate Prices
To calculate prices accurately, it’s important to fully understand all the costs involved in a business, including the cost of time and labour, plus overheads, as well as the more obvious direct costs such as materials.
The High Price of Benefits
Once we understand how valuable the benefits of our products are to the customer, we can price accordingly.
Reassuringly Expensive
Pricing influences customers’ perception and view of quality. A high price can reassure customers about quality and may increase sales.
Financial Support for your Business
Often, enterprises are receiving financial support – from the owner ! Ironically, as a result, these businesses lose money.
The Overheads of Your Business
All the overheads involved in the business need to be taken into account in order to calculate prices accurately.
The Cost of Time
It is often the case that one of the biggest costs involved in a creative enterprise is the cost of labour – in other words, the cost of your own time. So we need to know this cost too, so that we can build it in to the price of products and services.
Help your Retailers
If we are using distributors and retailers to sell our products, we need to ensure that they have an incentive to promote our products above the alternatives. Pricing and profitability needs to work for everyone involved in our distribution channels.
Create Packages to Increase Prices and Profits
If we continue to sell just one standard package of goods or services, and need to increase the price, it’s going to be very noticeable by the customer, who might complain, or even go elsewhere. Instead, we can say that we are no longer offering just one package but two, and they can choose.
Free
Giving some things away free can be part of a profitable business strategy.
Invoices can State Two Prices
Pricing is about two things: the economic transaction and a statement of value. If you give a discount for any reason, you should still state the full value. This is important for future reference and to ensure the customer fully values your product.
What are you Selling, Really?
It’s often the case that there is a difference between what you think you are selling and what the customer is actually buying. In purchasing your goods or services, customers are also often buying into a ‘lifestyle’, a ‘feelgood factor’, a ‘talking point’, a ‘community’, or a ‘story’.
How to Increase Prices – more information
Additional information and bonus content, including more videos and downloadable content.
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