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Most non-business people think the price of a product entirely depends on the cost of its production. While it is one of the factors, it’s most certainly not even in the top three most important. The price of a product is determined by experts according to their target audience, supply, and demand.
However, this doesn’t mean that you have to set just one price that will go on forever. It also doesn’t work like rents where you have to increase a percentage every year. The prices will go up and also down, but in every case, it will only benefit the business.
In this blog, we will show you how choosing the right pricing can boost your business’s growth in the long run – keep reading to find out more!
Before Getting Started
You have to be flexible on product pricing, track your production process, and do thorough market research and brainstorming before starting with the introductory price. It sounds like a complex idea to analyze and review manufacturing, but there are smart ways that can help you.
For example, you can use a Production Tracking framework to streamline your manufacturing and make a proper pricing estimation. Choosing the right product pricing will help you compete in the most challenging industries and grow at a faster pace than your competitors.
1. Makes Marketing More Flexible
Marketers have to entice the target audience to try your product. Simply praising the product and even showing great reviews is not enough.
They have to push potential customers into becoming customers. Even after that, they have to make sure that all customers stay loyal and keep returning. The biggest factor that could give them the push to go through the purchasing process is a discount or low price offer.
It may be a short time discount, but it has to be offered to new customers. Likewise, marketers have to use the advantage of flexible pricing when they see that a customer might soon leave them.
This also helps them retain unsatisfied customers. If you don’t keep getting sales, your business won’t survive for long. Product pricing can help get more customers and more sales while reducing the cost of marketing campaigns.
2. Builds or Destroys Your Business
Setting the wrong price will repel your potential customers. Even the ones who like your brand are unlikely to purchase the product if your prices are unattractive. A high price doesn’t necessarily mean a bad price.
Even setting the price too low also causes mistrust in your audience. Many think that a high price means higher profit. It is somewhat true but almost entirely wrong. You get more profit margin from each product you sell at a high price. However, the overall profit of your business declines significantly.
You might earn 10$ from each sale and sell it to ten customers, or you can earn $5 from each product and sell it to a hundred customers.
If lower prices would get you more sales, then that should be your priority. You may earn less on each sale, but hundreds or thousands of extra sales would easily make up for the low price and also buy you customer loyalty.
3. Pricing Creates the First Impression
The first impression is the last impression. If a customer feels like you are overcharging for something that should not be this expensive, he won’t come back to you.
Likewise, you also need to understand if it will create a cheap image of your product if the price needs to be higheris too low. Not all people think like this, so you have to study your target audience, their interests, and their purchasing power.
You have to build a great image of your brand in the minds of your target audience. Companies spend a big portion of their marketing budget on spreading brand awareness. Bad pricing and low-quality products could sabotage all that investment.
4. Clears the Unwanted Stock
Another great reason you need flexible pricing is to clear out the unwanted stock. You can’t tell your customers to buy things that no one else is buying. You should know the range of prices you can afford and set a price at which the product will definitely sell out.
Arrange a sale and offer 50% or more off on the products that no one is buying or are soon to expire. This also attracts many new customers who didn’t know about your brand. They would buy discounted products and explore all other products.