Pricing in Marketing: Top 7 Pricing Strategies in Marketing
Pricing in Marketing: Pricing in Marketing is the process whereby a business owner sets the price for sale of the products and services, using different pricing strategies and factors and may be part of the business’s marketing plan.
In setting prices of the products and services, the business owners will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of product.
One of the most important and critical questions you have to ask yourself as an entrepreneur is, how much should you charge for your product or your service?
Now, when it comes to pricing is such an important decision because it affects your marketing appropriately done.
Pricing could also be a marketing strategy. These help you with how you should price your product or your service.
Why is it important? You see, when you are not charging enough, let’s say your price too low. You’re not making a profit. You’re not making money when you price too high because maybe you’re not getting customers. You’re not getting a volume so that you won’t grow.
There’s that delicate balance to just the right type of pricing in Marketing. A strategy could change everything.
Strategies: Pricing in Marketing
Price to Your Competition.
That means final what your competitors are charging, and then maybe you charge the same. Let’s say they sell this product $100 and you say, Okay, I’ll sell my also $100.
Now, Sometimes I also see entrepreneurs what they do is they would take the average prices of if they say three top competitors and then they would just add together and divided up that also
Now there are some industries in some cases that might be okay; you won’t be competitive, especially if you are in what I call a commodity kind of business. That means your customers are shopping for the best price.
By having like a price that’s maybe 5 -10% higher than everybody else within your industry that might be hurting you because your customers like, hey, you know what you charge $100. I talked to the competitors, and your competitive only charges 90 or 95 now.
Unless you’ve done your proper marketing or are not prepared yourself, there might be a strenuous objection to overcome so prior to your competition.
The downside of this is that you are always reacting; you are always reacting to what your competitors are doing.
If you want to be a leader, ideally going to play offense, you want to be the one that’s leading, you want to be the ones that dictate the terms, dictating the price in the market place, so others follow verses you fall.
Price to Pay the Bills.
Also called break-even strategy. Price it enough so that you break even. It covers overhead. It covers your costs.
That might be good initially; in some cases, you are maybe entering a new marketplace.
You’re testing things. You’re saying, Hey, you know what I want to do just to break even. I just want to test the water, see how the marketplace reacts to my offer.
It’s possible, or sometimes you got to use it very, very carefully. Otherwise, you’ll go bankrupt. Doing this is, you know, making a profit because you are usually pricing break-even strategy to acquire a large volume of customers.
Sometimes I call that their self-liquidating offers meaning it says, for your low ticket offer on the front end, right, your price, it just wants to break even,
Price to Time.
This is probably one of the most common pricing models. Many people do this; Lawyers, professionals, accountants use a lot they charge per hour, or they charge per day or charge per week or charge even per month; that’s like awaiting the model priced to time.
How much time am I spending on this particular task?
How much time am I spending on this project?
They charge $20, 30 dollars $50, lawyers $100, 200 dollars $500 per hour price to time.
Personally, I think this model is getting on a date as we are now transitioning from the job economy to what I call a skewed economy.
Even if you could get it done in eight hours, they’re going to get it done within eight hours because the longer it takes for you to finish something, the more money you make. However, as a client, I want to get this done a sufficiently as fast as possible, but yet I’m paying for time.
So how does this work? There’s always this a conflict of interest. You want to make us much money as possible.
Nowadays, companies and people are paying for results. They much prefer the paper results. They want you to get it done for as little time as possible, so price the time in there is a time in place for this.
Price to Cost Plus
This is very common, for example, in the construction business, on the surface, very logical. This will cost how much to get this project done and say this project will cost a million dollars?
That’s the cost, and then you’re just add a 10 15% markup on that.
Very common in interior design and construction and a lot of different industries.
For example, if I’m a contractor, let’s say, and I know this project with materials and everything, it will cost a million dollars, and I’m going to earn my mark upon them by 15% under 50 k. Now, if their ways that I could save money if I can use better materials but cost less and get this whole thing done with $800,000 now most contractors nothing all but most contractors would think, Well, we want to get it done for 800 K because now I make less money doing the same amount of work.
It is in my best interest to spend as much money as possible. Still, from the client’s perspective, on the other hand, the more money that you spend, that more expensive the materials, they’re more expensive the labor, the more money that you make from the client’s perspective is opposite.
How do you get the best product? How do you get the best outcome for the least amount of money? Again, it’s a conflict of interest, but very, very common price to cost Plus.
Price to The Package.
It means that you are creating an offer or a package, let’s say the package, the total value is worth $10,000, and you’re only charging your customers $1000-2000.
They are only paying a fraction of what the entire value of the package’s worth. First of all, it makes the offer irresistible. Number two, if you want to increase the price or need to do, is how I could increase the value dot deliver.
That is instant access actually doesn’t cost me a lot of delivering that value, which is great cause it’s scalable.
But at the same time, the value is there. Its real value is how much it would cost if they buy it from different sources. So that’s fair, powerful, so the price to the package.
Think about how you can apply this in your business versus just selling the product, whatever that you’re selling. How can you package attractively?
Example; Let’s say you are selling website development instead of saying, Hey, you know what is going to chart you 100 bucks an hour to design a website. This website development package we are going to design, they say a 10-page website for you.
The package can be;
- We’re going to also set up a blog for you
- To create also 20 landing pages for you.
- We will create 30 emails and follow-ups for you so that you can convert those leads into sales of elites.
This is a package, and If you buy each separately is going to be like $5,000. But if you buy the whole package from us right now, I will cost you $2,000.
You know, there’s the package had put together, and you offer a more complete solution. So, it’s more attractive because you’re thinking on the client’s behalf. Like they will need an email down the road, a blog page, etc.
Price to Positioning
What kind of positions you have in the marketplace? If you the leading authority in your marketplace, you could charge a lot more money. Most people make a lot of sales, but they don’t understand how to do positioning. How do you position yourself that the go-to person, the go-to brand for whatever you do?
For example; Let’s say when you understand the power of supply and demand, you go to many consultants’ websites now, and you will find some charging an hourly rate of $10,000 per hour, that is, 10-K. Why would someone pay 10K to consult with them on an hourly basis?
That’s a lot of money, but why, because of demand. They have manufactured demand for their time. We only have 24 hours a day. Limited supply and a lot of demand. You notice a lot of premium products out there in the marketplace.
Ask yourself how you could use this to your advantage. How could you create a lot more demand for what you do while you offer what yourself and then what you want to do is you want to restrict the supply just like the diamond industry?
Do you know there’s a ton of diamond that’s out there? But the diamond industry is smart enough. They know that if they flood the market with so much supply, then the value of diamond would go down dramatically.
So, they were strict about supplying, and they drive the demand. In some cases, their manufacturing demand. So, then diamonds are way more valuable. But keep in mind that’s the price to positioning.
Price to Value.
Price to value. It is all about results and willing to pay a premium to get Full results. The client doesn’t care about time. They care about the effort, the result. So, it is a project and has a fixed amount of money the project has done. It means that there’s no ceiling to income.
Example; Let’s say run a consulting firm. Instead of charging the clients X amount of dollars per hour, you charge based on your results. The more results they generate more revenue there. Price to value.
Now you’re not getting paid based on time. You’re getting paid by what you bring, what value you bring to the time
You only need to spend a couple of hours a week on the project as long as you get the results. The way you look at things changes the way that you deliver value. It also changes how fast you want to live a value you want to deliver value to us as fast as possible.