Tuesday, 17 May 2022 14:41

    May Dispatch - The Price is Right Featured

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    DARREN'S DISPATCH | MAY 2022 | ISSUE 1

     

    GET MORE FROM YOUR PRICING  

     

    “Price is what you pay, value is what you get – Warren Buffet”

     

    When we talk about pricing goods or services, most people act like it is an afterthought for them. That pricing is simply a concept derived from the supply and demand curve in an economics class. Most often, business owners as well, talk about pricing only in terms of cost of production and profit margins. But is that all there is to pricing? Certainly not. 

     

     

    In the late the 1990s, Mastercard came up with a brilliant and somewhat ingenious marketing campaign. They devised and ad slogan so good, that even today, 20 years later, people haven’t forgotten what it was. Well for those of you who have forgotten it, let me refresh your memory. “There are some things that money can’t buy. For everything else there is Mastercard”. Starting from the US, this campaign had such a varied and long-lasting effect, that people started going to basketball matches with placards of prices of various objects on them, only to end the sentences with the word “priceless”. 

    mastercard 

    Knowing what to sell and knowing how to sell a product or service are the two most important questions any business owner needs to ask themselves. The size and scale of your business does not matter. More important than deciding what you sell, is knowing how to sell your product or service. 

     

    Pricing anything can be a very sensitive subject and can create nervous moments for anyone. But it does not need to be that way. Be it a product or a service, the aim of your business is to create a win-win situation for everyone. It doesn't matter what the numbers have to say, true success is measured by customer and retailer satisfaction, not just by profit margins.   

     

    Knowing what your customers want is an important aspect of deciding a pricing strategy. As a retailer/seller it is not just important to have the perfect product to sell, it is also important to know what your market is, and who your customers are. 

     

    Consider the following example – You are a manufacturer of high-quality leather jackets. Custom made, available in different colors and designs. You could price them at £69.99 hoping they would sell like hot cakes, and still be standing with an empty shop. One of the reasons could you, that you decided to set up shop in New Delhi, in the month of May when temperatures are well over 40º Celsius! Thus, knowing your audience is as important as having a great product or service to sell.

     

    The perceived value of a product is much higher than the actual price tag you put on it. If you price your products or services too low, you run the risk of your consumers thinking they are shoddy, cheap and lack production value. If you price your products and services too high, you run the risk of pricing yourself out of the market. 

     

    We have talked in length about knowing the perfect audience and how to market your products to them in a previous issue of Darren’s Dispatch. To see all other Darren's Dispatch's please click here: https://vault.developandpromote.co.uk/darrens-dispatch/You will need to log in to access them. 

     

    If you do not have access or can't remember your login details or have any other queries, please email This email address is being protected from spambots. You need JavaScript enabled to view it.

     

    How to Set Up a Pricing Strategy

    The most important thing to consider before you pick out a pricing strategy is to know that this option will define the outcome of your business entirely, from how the revenue will grow over the years to how the actual business and teams will be built. The products and/or services that you sell will have a huge impact on which pricing strategy you choose. 

     

    We’ve talked about the different types of pricing strategies in the next section of the Dispatch! Just scroll down. 

     

    The second important point to consider is that as your business grows, you may have to rethink your pricing strategy as well. What was a good strategy for you as a start-up, may not be a good strategy for your business to sustain in the market five years down the line. Conduct deep market research before you decide on what is right and what is wrong.

     

    Read on to find out how to choose the perfect pricing strategy for your business. 


     

     

     

    BUSINESS TIPS: CHOOSE THE PRICE THAT IS RIGHT FOR YOU

     

     

    Pricing a product or service can be a harrowing experience for any business owner. There are many options for you, and the optimal option is never set in stone. The right pricing strategy is fundamental for a company. Choosing the right pricing strategy and deciding the appropriate price levels for your business can be all the difference between profitability, breaking even or failing.

    Once you have outlined who your customers are and what your business caters towards, you can then move on to review the different pricing options available and the implications that these strategies may have on the growth of your company. 

    Before we move on to the business tips, let us have a look at some of the pricing models. 

    1.     Cost Based Pricing: This is the most common type of pricing strategy used by most retailers. As a retailer, you first analyze what the actual cost of the products are, and based on the cost of production, the business increases the pricing to a certain percentage to accommodate for profit margins. 

    2.     Value based Pricing: Value based pricing is perhaps the most sustainable and long-lasting pricing strategy. Value based pricing is a system of pricing used to price products at a cost higher than their markup price. Value based pricing is based solely on how your consumers perceive your products, how much your target demographic believes your product or service is worth. 

    3.    SaaS Pricing: This refers to “software as service”, where another company hosts an application or product for the customer and the customer can access it through an internet connection. 

    4.     Freemium Pricing: In this pricing model, as a business you offer your customers a product or service for free, with the expectation that they will be hooked on your service and eventually demand more features.  

     spotify logo

    Spotify is a great example of this. This music streaming platform lets you sign up for free and create account. In the free version, you just get a few ads every couple of ads. After a few months you get tired of the repetitive ads, and eventually sign up for the premium version. 

    5.     Competitive Pricing: The business analyses how it wants to be perceived vis-à-vis other competitors in the market, and then bases its price off of the prices of these other businesses. The company could try to slightly undercut its competitors, with the risk that the competitors would match this pricing and start a downward pricing spiral. Alternatively, the company could try a more premium approach and set its price above competitors.

    Before you read up more about these pricing strategies, here are a few tips to keep in mind:

    Tip 1: Feedback

     

    While feedback is an important part of conducting any sort of customer research, be sure that you are taking feedback from paying customers. These are customers who will have actual feedback for you, as they have already purchased from you and are familiar with the process of buying from you. 

     

    Tip 2: Change your Strategy

     

    As we have said earlier, your business will ebb and flow over a given period of time, your demographic might change, your market might change, your customer preferences may change as well. That is why we recommend periodically reviewing your pricing strategy. This will allow you to not only stay abreast with the demands from your customers, but you’ll also be able to review how your competition is doing. With this information, you’ll be able to adjust your pricing strategy accordingly. 

     

    Tip 3: Selling your Company

     

     

    It is normal to face some resistance from potential customers and to think you need to lower your prices to cater to them. But remember how we talked about Discount Dan in the last issue of Darren’s Dispatch? You don’t need to lower your price in order to cater to a certain demographic of customers who are only interested in discounted prices. 

     

    Focus on the value of your business and build your brand. Lowering your prices is never the right option for any business. You don’t want to attract customers who cannot pay full price for your products or services. 

    Tip 4: Avoid Negative Connotations

     

    When trying to sell your product or service, you must always remember to avoid using arguments that are negative. For example, when trying to sell a service or good, instead of saying that “Our product will reduce the number of employees needed for xyz task” try saying “our product will help your employees be more productive”. 

     

    Tip 5: Reward your Loyal Customers 

     

     

    The one sure shot way to make sure you maintain loyal customers throughout the lifetime of your business, is by rewarding your loyal customers. Give them loyalty points, or offer them products and services before they hit the proverbial shelf of your store. 

     

    And just as a thank you for being our loyal customers, we are offering you our custom-made rewards-based loyalty program. STS is a powerful and easy-to -use customer loyalty program that generates QR-code based gift cards and rewards to support businesses as well as their customers.

     

    Visit our loyalty program page here - https://satisfactiontosales.zkart.com/

    You can choose from one of our three plans! 

    Available at a discount for a limited period of time only.

    Screenshot 2022 05 17 at 7.02.40 PM

     

    There is no one-size-fits-all approach to choosing a pricing strategy. Each business within its market is unique and has a different perspective or product to offer. The key is to fine-tune your pricing until you reach the sweet spot that you are looking for, testing different strategies and price points until you find the perfect combination for your product or service.

     

     


    To see all other Darren's Dispatch's please click here: https://vault.developandpromote.co.uk/darrens-dispatch/You will need to log in to access them. 

    If you do not have access or can't remember your login details or have any other queries, please email This email address is being protected from spambots. You need JavaScript enabled to view it.

     

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