When do consumers consider $895 for a refrigerator a better price than $825? If the $895 is discounted from $995. Source: The Tao of Pricing. See also: 47 Ways to Raise Prices …Without Losing Customers. #pricing psychology #pricing #entrepreneurs
A rebate is a wondrous thing. It lets you discount your price ONLY to your most price-sensitive customers. How? Because only customers worried about the price will take the trouble to redeem one. Source: The Tao of Pricing. See also: 47 Ways to Raise Prices …Without Losing Customers. #pricingpsychology #pricing #entrepreneurs
How does a marketer find partners for bundling? A review of store scanner data can reveal which items are consistently purchased together. Source: The Tao of Pricing. See also: Pricing Psychology Report. #PricingStrategy
Fungible products sell cheap. (Fungible products have little difference from competitors, e.g. two brands of nails or of flour). To escape this classification (which buyers are applying to more and more products), consider bundling your product with another. Examples: A tea pot with an assortment of teas, a book with a short video course forContinue reading “Fungible Products & Pricing”
Alternatives matter. Customers who believe your $19 price is fair… won’t pay it if they know about equivalent (in THEIR minds) alternatives for $12. Source: The Tao of Pricing.
Price “reasonableness” is in the mind of the buyer. Examples: A 10% better soap might not be worth even a penny more to buyers. A 10% better wrinkle cream might be worth 500% more. Source: The Tao of Pricing.
Asking buyers what they’re willing to pay is like asking a fox to guard your henhouse. Why, then, trust survey responses when setting your prices? Source: The Tao of Pricing.
If an increase in your costs necessitates an increase in your price… even a minor modification to your product can divert attention from the price increase. Source: The Tao of Pricing.
Cost-plus pricing (adding a fixed percentage for profit on top of your costs) is the worst pricing strategy around. And it’s used by most companies(!) But… there are two good uses for it: Use it when all your products or services are completely customized. Thus if you build new houses to customer specs — thenContinue reading “Cost-Plus Pricing Strategy – 2 Good Uses”
Cost-plus pricing is where you calculate your costs, then add a percentage to it for profits. It is used by most companies. Cost-plus pricing is required only where you sell customized products/services — where every order is different. For all other products/services — it’s the worst pricing strategy you can use. In fact — youContinue reading “Do you use this terrible pricing strategy?”