A recent survey by the Boston Consulting Group revealed an interesting statistic. Only 30% of all Indians were ready to spend more on products they thought had high quality. Which means 70% feel that the price matters more than the quality. This figure shows the importance of accurately pricing your products.
Effective pricing ensures that users notice your products instantly. It helps you get more orders because users feel that the prices are worth making a purchase for. Here is how you too can price your products correctly
1) Consider The Costs And Add Margins:
One of the most popular forms of product pricing is a cost-based strategy. Add each and every costs which have gone into making or sourcing your product. This includes transportation costs as well. Then determine amount of profit you want, also called the profit margin. Add the margin to all the costs you have incurred to fix the final price per product.
2) Identify Value Through Market Rates:
As said earlier, price is the priority for most customers. To know which prices will attract them, look at how other stores have priced the products which you are selling. For eg: if you sell dinner plates and other stores sell them for Rs 400-500 then you must price your product around that range. Your plates cannot be either Rs 700 as they will be overpriced, or Rs 200 as customers will doubt its value.
Fixing the price will help you to manage your costs according to it. This will help you to organize your business activities accordingly.
3) Combination Of The Two:
Some products need a combination of the two pricing models. Take the example of clothing. Through market rates, you will know which prices customers want to make purchases from. At the same time, there are certain costs like material procurement, packing, delivery etc which cannot be compromised. Hence you need to price the product with a combination of its cost and the value it brings customers.
4) Psychological Price Points:
Regardless of the nature of your product, there are a few simple tricks you can use. These require minor adjustments but are extremely effective. Both these techniques have been identified after many scientific tests in the USA.
a) Keeping your product prices at 99, 199, 299 etc instead 100, 200, 300. There is only the difference of Re 1 between them, but customers feel that they are paying less. In the first example here, the customer feels that they are saving up by paying for a product with two digits (Rs 99). So they will feel less burdened and be inclined to pay.
b) Prices which take more time to spell out or read are not preferred by users. For eg: Rs 358 is lesser than Rs 370. But reading them (even in your mind), three fifty-eight requires more efforts than three seventy. As a result, customers are likely to be attracted to the Rs 370 priced product.
As you can see, a lot of your operations and planning depends on your pricing. After all the customer has to pay for it, so they must find value in it. Hence, it is your responsibility to provide a price which suits him and is convenient for you to sell it as well. Understand the value of your product and accordingly use these strategies to put an effective price on them. Good Luck!