Whether on the subject of consumer goods or services, we often hear entrepreneurs hesitate about the price of their offer or even tell themselves that it is about cheapening the sale, forgetting to take into account the margin . Determining a good pricing policy for your products or services means finding one that suits both what you’re selling and who you’re selling it to. Let’s discuss together the pricing aspect of your business model. It is a real topic of global strategy that we could talk about for hours. But discover the keys to success in less than 5 minutes.
1/ Market research first
First, think about your market research and be as clear as possible about what you’re selling. Above all, you need to know who you are selling to and exactly how much your customers are willing to spend for your service/product. If you have doubts about this point, carry out a small qualitative study that will help you determine the psychological price of your target. Obviously, we are not going to approach a pricing strategy in the same way if we are targeting the “mass market” or if we are targeting a demanding and elite clientele. The study is not everything, do not forget that your target is not necessarily aware of how much they should pay for their offer and that sometimes you will have to confront it with the market and adapt it according to the response.
2/ We never look at a single product, isolated.
We always look at it in a system. First, the intern to your offer. Is it a loss leader, meant to lead your customers to more sophisticated offerings, or is your product premium, the top of the top of what you have to offer? The price of a product is always part of a range logic. It can have a specific function and be used to drive the sale of other products. Many companies attract their customers for one reason and then fire them with other products, for example, with a high margin.
You also have to look at the positioning of your company in your market. Do you position yourself like Uniqlo and do high volumes with very low prices or do you position yourself like Saint Laurent with higher prices and far fewer customers? In any case, you have to choose, because very low prices with few customers do not work.
3/ A price is never “just” a price.
A purchase always represents an investment. An investment to get closer to what we want to be and what we want to have. And what do your customers want? Generally 4 very simple things: more time, more money, more love and recognition and more health. These are the 4 main motivations that drive us to buy or acquire things, although we can also mention comfort or safety.
What you need to be successful as a seller is to convert the value of your property into real-life earnings that revolve around the motivations of your customers. It is up to you to ask yourself what results your products give and how you can turn them into a Work, Money, Love or Health benefit, for example.
4/ Don’t be afraid to raise your prices!
You can also decide to be more expensive than the market average or upgrade by increasing your rates along the way. The reaction of employers is usually: “That’s fine, but if I raise my prices, nobody will want to work with me anymore because they won’t have the means, I’ll be more expensive than my competitors, I’ll lose all my clients”. They are often surprised because the good news is that the exact opposite usually happens. When you raise your prices, you have more customers who want to buy more. Why ? Because people deeply believe that they will get what they paid for. Sometimes that is true, but not always. But the fact is that most people think that the more they pay for something, the more valuable it is. It is a very human shortcut to think that if you put a price on it, it will be of better quality, who says quality says value, who says value says desire. But be careful, you don’t double your prices like that overnight, with no explanation.
However, an explanation is still necessary. Then you usually need to justify the value you bring and the benefits your customer will get. If he understands what he will earn and how his life will be better because of you, your products or your services, he will be happy to pay you.
In the end, your price just needs to be consistent with your overall strategy and cheaper doesn’t necessarily mean better. Sometimes a price you wanted low to win more customers can have the opposite effect and bring you or your brand into disrepute.
Think of the global strategy, think of the universe of the brand, think of the price in your system.