Know Your New Business Pricing Strategy Here

Pricing strategy is
the most critical aspect for your business, determining your business standard
in the market. It plays a vital role in increasing your profits and maintaining
a competitive edge. Early market research helps in determining the price to
your products or services. Pay more attention to past fluctuations and analyze
market demand. 

New Business Pricing Strategies:

Initially, establish
your pricing objectives. You are responsible for making or breaking your
business with your pricing tactics as your pricing strategy directly affects
your company revenues. Hence, consider the best pricing strategies which suit
your business goals. While preparing to price, the aspects that need your
attention are short and long-term profits, achieving market stabilization, and
increasing market share.

1. Maximizing Price:

You can make pricing
decisions which generate excellent revenues for your company by maximizing the
price. Calculate your business fixed and variable costs and then work out a
plan to minimize the expenses. It helps you with a maximizing the price-output. 

A pricing maximization
is one of the best and essential strategies for small businesses or startups
who prioritize their revenue growth. 

2. Penetration Pricing:

It is a method to attract many buyers with your products or services at the lowest prices compared to your competitors. You can increase your market shares with this incredible strategy.  

New businesses
implementing this strategy may face challenges unless they have a long-term
plan to build the customer base and increase the price, eventually hoping to
retain loyal consumers.  

3. Price Skimming:

You can apply this
strategy while introducing your products and services. The primary method
involves raising the product to the market at a particular price and then
lowering the cost to attract more customers. You can generate extraordinary
profits in the introduction stage of your product or service. If the demand for
the product or the service is high, it is an ideal strategy.

For instance, Apple
implements this price skimming strategy every year where new iPhone prices are
at an initial price at the introductory phase and then start lowering the
costs.

  • Economy pricing:

You can minimize the
costs to sell your products or services at the lowest prices compared to the
market prices. But this strategy is useful in some cases only. It could be
risky for small businesses as profits depend on sales volume, where
profitability is difficult.

  • Psychological pricing:

You often see the
prices like 999 instead of 1000.

Do you ever wonder why these prices are like that?

This strategy is known as psychological pricing. 

  Humans are
attracted to emotions than logic. Hence the costs will be like ‘9’ in your
pricing, making you assume the product is cheaper. Also, you can offer your
customers with gifts along with your product. For instance, a beauty product
company provides its customers with a shopping voucher to buy products in the
company.

Summing it up:

Pricing strategy is an
essential strategy for businesses that includes all the aspects like promotions,
placement and people. All pricing strategies have their importance. 

Some people may like
your strategy, and some may not, you cannot make everyone feel happy with your
plan. But do not forget that you need a customer to purchase your products or services.
For that reason, you should build your pricing strategies with your ideal
customer in focus.

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  • ONPASSIVE
  • ONPASSIVE
  • 15 January, 2021
  • –>

  • 288 Views
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