Should I have standard prices?<\/strong><\/p>\nAre all your customers prepared to pay the same price? No, so consideration of differential price packaging should be a core part of your strategy. The challenge is how to apply differential pricing while retaining control of your price list. The most common categories of differences are demographics, geography and volume. Your local wine shop has trouble competing with the big chains, because they buy a few cases, delivered into their back dock, while the chains buy a few truckloads delivered into a central location for redistribution on retail demand. This increases their stock turn, by minimising pockets of slow moving stock, reducing average cost.<\/p>\n
How many price options should I have? <\/strong><\/p>\nDo not give each customer any more than three price options. Our minds tend to get overwhelmed by too many choices, three is the optimum. Those three options should be clearly articulated with the differences in value that is delivered by each. This strategy is almost universally used for on line sales of software services. They all use the three columns, with varying added services for an increased price.<\/p>\n
In which order should I show price options?<\/strong><\/p>\nShow the highest price first. Often this is counter intuitive, as the instinct of many sellers is to go low in order to ensure they secure the sale, which almost always leaves money on the table. It is way easier to go high, as you then have room to come down while perhaps removing pieces of the value offering that do not add value to the buyer, or that cost you nothing to remove, but seems to be a concession. By contrast, by going in low, you have nowhere left to go if the buyer is looking for \u2018more\u2019.<\/p>\n
Should I show shipping costs?<\/strong><\/p>\nNo. Instead, shout ‘Free shipping’ which is a powerful motivator. ‘Free’ is one of the most psychologically strong motivating words, so use it by including shipping costs in your price. Amazon has used this strategy to devastating effectiveness by offering an annual subscription that enables free shipping via Amazon Prime, now in over 50% of US households. It also adds a distribution channel for other services, such as video streaming<\/p>\n
How can I manage competitor pricing?<\/strong><\/p>\nYou cannot, you do not live in a vacuum, competition is a reality of commercial life. However, concentrating on the value of your offer rather than just the price will deliver the best results. Every purchase decision made has a context, winning just because you are the cheapest is a good way to go broke.<\/p>\n
How do I manage price increases?<\/strong><\/p>\nCarefully, but offering notice of a price increase is both proactive as a means of simply being courteous to your customers, and as a deadline by which they must purchase in order to get the current price. This can act as a powerful call to action.<\/p>\n
Another of Warren Buffett’s quips is: If you have to have a prayer meeting before you put your prices up 10%, you have a lousy business’<\/em><\/p>\nThe final word is that not every deal, not even those that seem to be ‘in the bag’, will come to fruition. The reason stated will often be ‘price,’ but that is rarely the whole story. Politely probing for the real reasons and learning from them for the next time, is a core part of the task of a quality sales process.<\/p>\n
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Settling on a pricing mechanism for your products and services is a profoundly important element in a successful enterprise, but is often the last thing done. Ask a few people internally, go and see what others are doing, or just add a margin to your costs and out you go, all of which will result […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8780,175],"tags":[1214,393245,140198,57258963,166429,57258962,2267523,57258966,8553],"aioseo_notices":[],"jetpack_featured_media_url":"","jetpack-related-posts":[],"jetpack_shortlink":"https:\/\/wp.me\/p5fjXq-2Eh","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts\/10185"}],"collection":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/comments?post=10185"}],"version-history":[{"count":1,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts\/10185\/revisions"}],"predecessor-version":[{"id":10186,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts\/10185\/revisions\/10186"}],"wp:attachment":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/media?parent=10185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/categories?post=10185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/tags?post=10185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}