No one would argue about just how tough the economic front is. During these sluggish times businesses attempt to compensate by reducing operating costs or changing their pricing. Let’s look at 5 pricing strategies for small business.
Strategy #1 – Don’t Slash Prices Except to Move Obsolete Inventory
When economic times hit, the most common mistake small business makes to try to increase sales is to slash their prices. According to the experts, that’s not what you should do, unless you are trying to move obsolete inventory. Instead, leave your prices alone and get creative.
For example, let’s say you charge $48 a year for an annual subscription to your magazine. Instead of advertising to annually, try “Only $4.00 per month for a monthly subscription.” If your business accepts credit cards then you can setup a reoccurring payment that’s billed monthly. It sounds like much less money and therefore you are more likely to keep that subscription.
Strategy #2 – Create Tight Niche Products – Don’t Generalize
What does this mean? It means you shouldn’t generalize. For example, let’s say you offer tailoring services. Rather than advertising just that, you might promote “pants hemmed for $14”or “custom wedding dress fits for as little as $20.” The more specific you are and the tighter your niche products the more likely you’ll enjoy success.
Strategy #3 – The Nine and Zero Effect Equals a Bargain
People link the number 9 with value and 0 with quality. Let’s look at a fine dining restaurant and a fast food outlet. The fine dining restaurant offers a gourmet entrée for $20 where as the burger meal costs you $5.99. So what do you want to tell your potential customers about your business? Are you quality or value?
Strategy #4 – Anchor Pricing
If a consumer is not familiar with the product, you offer they will look to the highest price within a category as an anchor. For example, if you go to the supermarket you might find Campbell’s Soup. On those same shelves, you might find a private label that’s 20% less.
Strategy #5 – Quantity Pricing
Quantity pricing has become very popular in these tight economic times. It’s a strategy that’s responsible for many of us eating too much. For example, a fast food restaurant offers 5 for $5. Your suggest how many you want the consumer to buy and then you offer it at a great price. Consumers will do what you tell them if it sounds like a great deal.
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There you have it – 5 sound pricing strategies for small business.
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