Pricing is a combination of science and art. We cannot focus on science without art or on art without science when we are pricing our products and services.
Do you think that your price is one of the most important elements in your business?
Do you know that everything that you do in your business impact on your prices while on another side, your prices impact your offers, sales and value perception of your customers?
Let’s see some of the frequently and most disastrous mistakes that you can make.
1. Lack of analytic approach in your pricing techniques
Prices are based on numbers. It’s the fact. That’s numbers comes in the form of costs, sales, market… All that 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 on your pricing strategy, they are not the most important part in your decision-making process. Many entrepreneurs simply to avoid making their own analysis decide to copy the prices from the most important competitors. That’s “me too” strategy.
But, what if your overall offer is better than competitors? What if your costs are bigger than your competitors? What if your quality is better? What if your offer have additional values?
3. Too low prices
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 can 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 is only small part of what you sell to your customers. Maybe you are selling bread, but you also sell a smile of the sales person. You also sell ambient, advice…
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 need.
Because of that when you set up your prices, you’ll need to start with a broader view about 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 Using outdated pricing techniques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, costs plus technique is useful, but only when you look in an 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.