In this highly competitive era, you’ll find very similar products for similar prices. So, nowadays increasing prices can be quite difficult especially with tons of similar products available for cheaper prices!
Small businesses and big enterprises are quite similar in some aspects. And one of the main things they have in common is trying to increase their profit and lower their costs. It doesn’t matter if you’re a beginner in the business world or a senior, your main goal is to make as much as profit as possible while lowering the costs.
It’s basic human psychology, the more you have the more you’ll want. So, it’s no surprise if you see enterprises increasing prices overtime and setting a very aggressive marketing strategy to promote their products more!
An aggressive marketing strategy is although an expensive charge for the enterprises, but it increases their profit margin and has a high ROI. So, how can you set prices that will keep your business profiting without losing customers?
And, that’s when pricing psychology comes into play! If you understand your buyer’s psychology and pricing psychology, you’ll be able to set the prices you want without being afraid of the competition. And that’s what this topic is about!
Show Buyer the Value That Will Transcend the Cost
Buyers are quite simple; they want the best quality for the best price. Pricing is a simple concept that goes above and beyond a simple purchase. Pricing reflects the quality and effort that went into a specific product. And, whether we like or not, our psychology always makes us feel that the more expensive a product, the better it is.
And, that is how you’ll be able to win over your buyers. If you want people to buy your products no matter the price, you’ll have to show them what they’ll earn from using it. Instead of working around the best price in the industry or increasing it, work around a product that delivers results and is unbeatable in the market.
Instead of following the instructions of a facial for three weeks to see results, create a product that delivers the results in a matter of a week. Time is always more valuable than money. If you’re able to apply that to your product then no matter how pricy the product is, it won’t matter to your customers.
Word of Mouth Marketing
And if that wasn’t enough to convince you, then here’s another bonus. If your customers try the product and see the results as you promised them, then the first thing they’ll do is share the news with the people they know.
In the marketing world, this is called “word of mouth”. Your customers promote your product for free because they’ve enjoyed the experience or results. The word of mouth is very trustworthy when it’s coming off people you know, especially friends and family. So, when you work on quality, you work, indirectly, on your marketing strategy as well.
Time & Price
We’ve all heard of the expression “time is money”, and while it’s an old expression, it only expresses the reality of things. People are ready to spend money on kitchen or house gadgets that will help them in spending less time doing house chores or cooking.
That just shows you how much people value time more than money. If time is lost it can’t be compensated on the contrary of money. If you’ve got all the experiences you need in the business world, then losing money is not a problem because you’ll be able to regain it.
But, on the other hand, if you’ve lost time doing nothing and haven’t gained experience, no money can compensate that.
And that is why, if your product helps customers in shortening the time of a certain task or gives a unique experience, the price will be just a number.
Understand Comparative Pricing
When you walk into a store to buy a shampoo, you’re usually faced with a lot of options. You’ve got shampoos from known brands which you’ve tried and you’re sure of, and you’ve got new shampoos that are way cheaper but you aren’t sure of.
In most cases, the consumer will either buy the shampoo of the brand he knows or he won’t buy one at all. Facing new & cheaper choices of which you aren’t sure can be quite hard. Buying new products is kind of risky and that is why we always tend to buy products from bigger brands.
Comparative pricing usually happens all the time, but it happens in two different ways.
Implicitly & explicitly.
Implicitly happens when the customer is the one doing the comparing without being pushed to doing it.
Explicitly is when the customer does the comparison when it’s brought up by an advertisement or another promoting tool.
And while you might believe as a business that explicitly asking customers to notice the price difference is a good idea, it might not be. It’ll make them more cautious and it’ll make taking a decision harder on them. But, if you let them the comparison on their own, then they’ll feel more in control and will make a decision faster.
Option Overloading’s Impact
You might believe that giving your customers several options to choose from is a blessing, but it isn’t. Customers are easily distracted and confused. This means, that every time you overwhelm them with different options and different choices, they can’t choose any of them and thus won’t buy from your company in the first place.
Imagine M&Ms present you with different choices of products, either you’ll choose the classic one, or won’t choose one at all. A lot of products that look all too similar and that have different prices will ruin your sales.
So, next time concentrate one-two to three benefits that your product has, and only two to three different products and you’ll be safe. Lesser options mean less time to think about which one you need, which means a higher chance of purchasing.
It’s basic human psychology, don’t overwhelm your clients and they’ll certainly buy from you.
Pricing Is More Than Just A Number
Next time you think about your pricing strategy, keep in mind that pricing is a transcendent value that goes beyond just numbers. Pricing reflects so many things, it reflects your brand’s notoriety, it reflects your efforts, the quality, and so many other values.
So, if you’re wondering how to increase your prices or how to choose the right price, then just work on better quality. A better product that has a value that exceeds its price, then it’ll be a simple catch that no one will dare to say no to.
Work on your price, work on your quality. So, have you guys ever worked on your pricing strategy? Is yes, then what were the things that you kept in mind before decision making?