Pricing does not get enough attention in the world of marketing advice. It is one of the most underrated tools that marketers have at their disposal.
Most companies set price in one of two ways:
1. They add up the total cost of a product and add a percentage to it to be kept as profit
2. They look at what their nearest competitor is charging and match it
Both strategies are wrong.
The correct way to price your products or services is to determine what the value is to a customer. If the value provided is higher than the price you are currently charging, you have room to increase price without losing sales.
So how can you successfully charge a higher price?
- Figure out how to add value. You can do this by adding features, improving service, making the product more convenient or higher quality. Then charge a price that better matches the new value.
- Do a better job communicating your value to customers. This is the primary role as marketers, to get the right message out into the marketplace and establish the value that you provide that your competitors don’t.
- Use discounts or limited-time promotions to attract price conscious buyers instead of everyday low prices that eat into your margins.
- Offer a tiered-pricing strategy to satisfy both the high-end and the low-end of the market, with select features available at a higher price than your basic model.
Market leaders do not usually offer the lowest prices. They have established themselves as the market leader because they do something better than any of their competitors, and their customers are willing to pay a higher price for that reason.