Pricing is a combination of science and art. We cannot focus on science without art or focus on art without science when we are pricing our products and services. So, there are many possibilities to make several pricing mistakes that will cost your company.
Do you think that your price is one of the most critical elements in your business?
Do you know that everything you do in your business impacts your prices while on another side, your prices impact your offers, sales, and value perception of your customers?
Let’s see some of the frequent and most disastrous mistakes that you can make.
1. Lack of analytic approach in your pricing techniques as a pricing mistake
Prices are based on numbers. It’s a fact. That numbers come in the form of costs, sales, market, etc. All those numbers have or will have an impact on your prices. Because of that, you’ll need to analyze such numbers and appropriate conclusions to include in your pricing strategy.
2. Too much based on “me too” strategy
Although your competition will impact your pricing strategy, they are not the most crucial part of your decision-making process. Many entrepreneurs simply to avoid making their analysis decide to copy the prices from the most important competitors. That’s a “me too” strategy.
But, what if your overall offer is better than competitors? What if your costs are higher than the costs of your competitors? What if your quality is better? What if your offer has additional values?
3. Extremely low prices as a pricing mistake
I know. Your competitive advantage is based on your low prices. But, is there nothing other on which you can base your competitive advantage?
I could say that something is too expensive if I didn’t believe in the quality of that something. Furthermore, I will say that something is expensive if I can’t differentiate one offer from another.
In any case, the price should be last on your list when it comes to competitive advantage.
4. Looking only on your products or services without a broader view
Your products and services are only a small part of what you sell to your customers. Maybe you are selling bread, but you also sell a smile from the salesperson. You also sell the ambient in your store, the advice, etc.
Today in the business world, the battles are between ecosystems, not between isolated products and services. Isolated product or service is only 30% of real customers’ needs.
Because of that, when you set up your prices, you’ll need to start with a broader view of your overall offer.
5. Using outdated pricing techniques
The new era in which we live today and the new needs of the market make it impossible to use some of the traditional pricing techniques. For example, the technique costs plus is useful, but only when you look at isolated products. That technique can’t be used for the more complex offers that you use today.
Because of that, use them, but not rely exclusively on such a traditional pricing technique.