As a preliminary to formulating a pricing guide for online marketers or small business owners in the offline world, you need to focus on the strategy you want to employ. This is a very important first step as it will put you in the ball park when it comes to what you can realistically expect. Here are some factors to consider:
What is your aim with the launch of this particular product or service? Is it to undercut your competitors? In that case, your price needs to be under market value initially to secure a customer stream. You have the choice of either losing money on the first X number of sales or coming close to operating or production costs to secure a small profit. Once your sales campaign is up and running the price can of course be reviewed and increased.
Have you devoted a fair proportion of your sales copy to building up a high perceived value for the product or service you are offering? If you have built up high expectations by increasing the perceived value, then a low price can destroy your credibility and might even seem a little ridiculous. This factor should definitely guide your pricing. So in that case, the price needs to be at a reasonable level in order to give support to your claims and the perceived value you have created.
Now with that background out of the way, let’s get into the aspect of the pricing guide relating to specific numbers. Much research has been done regarding pricing levels and which numbers seem to appeal more to prospective customers. The number 7 scores very highly in a user’s perception. So prices that end in 7 are more likely to sell than any other number. Then of course, there is the psychology that goes into the 95 cents or 99 cents part of the price. Some combinations work better than others. Here are the findings in an easy reference list:
Prices Under $10
End the price with 99 cents rather than 95 cents. True there’s only 4 cents in it, but why leave it behind? 4 cents is 4 cents. It doesn’t make any difference to customer perception whether the price ends in 99 or 95 cents in this low price range so take every cent you can.
If you can price at $7.99 you may be surprised with the results, given the power of the number 7.
Prices Between $10 and $100
Here a different set of psychological elements come into play. We are now dealing with a higher price range and to finish a price with 99 cents seems as if the marketer is trying to squeeze just that little too hard. 95 cents and 75 cents have a better acceptance rate.
Again if the first figure can have a 7 in it, e.g. 17.95, 27.95, etc. it seems to work better.
Prices Over $100
With higher priced items, forget about the fractions. A clean round figure works best, so again be sure to make a 7 the last number, e.g. $127, $147, etc.
A footnote should be added here if you are offering a service rather than a tangible or digital product. Services elicit different emotions yet again. To offer a service for $59.95 an hour doesn’t sound right. Round it off to $60 or whatever figure you set for your charges. Customers don’t expect an ‘on sale’ kind of mentality when it comes to paying for professional services.
So our pricing guide is progressing. First, we considered the background to our pricing, what it is we are trying to achieve. Secondly, we went through the mechanics of pricing so we get the actual number combinations right. Now we come to the third element.
The Third Element In Your Pricing Guide
How do you find out what your customers are happy to pay? Quite simply by asking them. That however, is not so simple. Ask quality questions and you should get quality answers. Ask general, neither here nor there, questions, and you will probably get indistinct, inconclusive answers and results. So the third element in putting together a pricing guide is to carry out a carefully constructed survey with just a few key questions to find out what the customer thinks about your product or service and what they are prepared to pay for it.
And this part of the pricing guide is a separate study in itself. You can do your own research on surveys and find out from searching the internet what others have done. Or you can use a scientifically proven system that does it all for you – the resource box has details. If you spend some time setting the optimum price for your product or service, you will be greatly rewarded. You will have the satisfaction of knowing you are not carelessly leaving money on the table every time someone makes a purchase.
Author-Bio: Did you know that in less than an hour you can be on the way to discovering what the perfect price is for your product or service? Click here to find out:
http://www.net-vault.com/ultimate-pricing-guide.html
