The Psychology of Price: How to Set Up Correct Pricing For Your Product?
Last Updated on December 24, 2021 by Ruchir Shastri
How to set up correct pricing for your business and clients alike to stay profitable and not to lose customer loyalty?
The first thing to consider is to have a product knowledgeable person on board. Someone who really knows about the business and what is essential to succeed. In most cases, this person is the CEO or company’s owner as they are those who are responsible for overall profitability and performance. Or course, market, company goals, and competition have an impact on pricing and commercial policy.
Psychology of price is not an easy topic; however, it can drive us to understanding of how this overall process works. There are pricing techniques that help to set up prices to catch peoples’ attention also the are some basic rules that all the businesses should know about. Pricing techniques or basic rules both guide us to have remarkable results in the process. We will cover them, so you are not overwhelmed with all the existing techniques in the psychology of price.
Market research should go hand to hand with business, but in many cases, we do not pay the necessary attention to it. If we know who the competitors are, we will have a more clear idea of what we may face. Based on that, we will also know the audience we are pointing to and the feedback we’re going to receive.
Know Your Business
You should know all operational business costs as this is the basic when setting up prices. We should have this information always at hand because it is not going to be logical to sell something 30% below the cost price. Of course, businesses should and will use discounts to let people know about special deals and boost sales, though this will be just in a promotional case and should not heavily influence your business marginality.
Knowing Your Audience
Once the business is launched it should have an audience in mind, depending on this audience will be the prices and the goals the business must set. The most important thing is to stay realistic: businesses cannot wait for gross profits if they are just focusing on competitive prices. On the other hand, it is possible to have competitive prices, because you make a profit from mass sales and not of the individual product price.
Stay Aware of the Market Situation
The markets are changing every single second around the world: some products or services are lagging and if the company is not adapting to those changes the customer will jump away easily because the business will be out of date. This applied to all types of business. Clothes, electronics, services to name a few.
Set Up Basic Prices
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