Have you ever wondered how the prices of different goods and services are determined and selected? Have you ever considered that the wrong and inappropriate choice of a price despite the high quality of services and products can fail it? Are there rules and strategies for pricing products and services? Nowadays, strategies and methods of pricing goods and products are used in order to maximize sales and, of course, customer satisfaction. Join us to learn about these pricing methods and strategies.

Why is the pricing of goods and services important?

The price of a product or service is the only factor that can directly make you profitable. When a buyer hesitates between two or more similar goods, the first and most important thing to consider is the price. This means that we all like to buy a quality product at a better price. So despite the fierce competition in the market, choosing the wrong price can lead to the failure of your business.

What you need to know before pricing

Before you get acquainted with the strategies and methods of pricing goods and services, you should learn important concepts and ask yourself some questions:

• Does the price you are considering match the features of your products and services?
• How different is the price you offer compared to similar models in the market?
• What is the best time to raise or lower prices?
• When is the best time to sell with discounts?
• Is the target community able to pay the intended price?
• And…

In addition to the questions you need to ask yourself before pricing, there are also concepts that you need to know before choosing a pricing strategy and method. These concepts simply include the following:

• Cost: Cost includes all fixed and variable costs, direct or indirect, that you incur to produce and offer your products and services.
• Price: The cost that the customer will pay to buy or receive services.
• Purchase value: Purchase value means that the buyer is confident that the value of your product or service is greater than its value. In fact, make sure that his purchase is a cost-effective purchase.

Stages of pricing goods and services

In order to become more familiar with the pricing of goods and services in a more principled way, it is best to know what steps we have to take before we go into pricing strategies and methods.

Step # 1- Discovering Your Purpose

You may have different goals for the pricing of your goods and services. Therefore, the method you will consider should also be in line with achieving your goal. In general, 5 goals can be considered for pricing goods or services.

• Survival:  If the market for competition in the goods and products you offer is very hot, your customers ‘demands are changing or you find that buyers’ acceptance of the goods and products is less, your goal of pricing can remain first. Stay in a competitive environment, not profit! In the meantime, you first want to find your main position at a reasonable price and then think about profit. Of course, this is a temporary step and you can not stay in it for long.
• Maximum market share and more sales:  Most of you are probably familiar with the term lower profit, more sales. The goal of commodity pricing in these people is to first occupy a significant market share, consider a lower price and get the profit they want in return for more sales.
• Maximum profit now:  Another goal that can be considered for pricing methods is to want to get the maximum profit you want from the very beginning of the introduction of products and services. This goal will be achieved when both the target market and the target community are relatively stable and your product has unique capabilities and characteristics compared to its competitors.
• Introducing a unique product : Many companies are looking to offer a product with a unique feature and high technology and to get the maximum profit they want until the competitors have taken action.
• Product-quality leadership: The  purpose of this type of pricing of goods or services is to be able to build a brand and introduce the desired brand as a leader and the best in the same field. That is, present your products and services in the highest possible quality so that you can introduce yourself as the flagship of the desired product or service in a competitive environment.

Step 2: Check the demand for the product

In the second stage of pricing your goods or services, you should check whether there is still demand for it or not? Is this demand decreasing or increasing? Has a new product been launched recently or not? Has the needs of customers in using the product changed? And other questions to make sure the market capacity to import new goods is not yet complete and demand is still high.

Step 3: Estimate your final cost

At this stage of pricing, you should be able to estimate the final cost of your products. This cost includes all the costs that you will pay directly and indirectly, fixed and variable.

Step # 4- Discovering Your Purpose

In the fourth stage of pricing goods and services, you should try to find an acceptable knowledge of your customers and target community. You need to know what group of people your target community is? What is their taste? What are their needs and what are their needs?

Step 5: Find and differentiate your competitors

At this stage of pricing you need to introduce your target audience to your competitors. So that customers can choose your goods and services in a situation where your price is the same as your competitors, because of their distinction and superiority.

Final step: Select the model and pricing method

By considering all the above steps, you can get acquainted with the pricing methods of goods and services in the next step and choose the appropriate option.

Methods of pricing goods and services

Dozens of different models and methods are used to price goods and services. Which method or methods you use to price your products and services depends on market conditions, target audience, type of product and service, competitors’ conditions, your pricing goal, and so on. The most important models and methods of product pricing include the following:

Pricing method based on cost plus profit

One of the oldest pricing methods is for you to determine how much it costs you to produce a product. Then introduce this cost along with your desired profit as the price of the product.

Pricing based on experience curves

Another pricing method is a noticeable reduction in price to attract more customers. This method is more suitable for well-known companies and brands that people have measured their quality. targetedwebtraffic.com In this way, the employer with his many years of experience can reduce the additional costs in the production of the product and as a result, offer the product to the market at a lower price.

Demand pricing

This pricing method is based on the fact that your brand has its regular and loyal customers and does not pay much attention to the price of goods and services. Of course, unfortunately in Iran, the value of goods can not be accurately measured and determined.

Freemium pricing

One of the most popular methods used by many entrepreneurs is the Freemium pricing method. This method is more suitable for pricing for services and has little place in the pricing of goods. In this method, first the service or part of it is provided to customers for free. For example, in a software or computer game, the first few steps are free for you, but you have to pay to enter the next steps. This method will properly engage the audience and if you have a high quality work, you will encourage your audience to buy.

Hair extensions pricing

Another modeling and pricing method is the bubble method. This method is the exact opposite of the penetration method. This means that instead of offering your product and service at the lowest price and then increasing it, you will choose the highest price and bring it down over time. This pricing strategy will be effective when your goods and services use new and unique technology and your audience is willing to pay high costs to experience it. As competitors enter the field, you can reduce prices to stay competitive in the market.

Psychological pricing

All of you have probably encountered products when buying that the price is 99 thousand tomans instead of 100 thousand tomans! Does a thousand tomans really make a big price difference for the buyer? Undoubtedly not. It is interesting to know that this pricing strategy can increase sales significantly. Many reputable international stores and brands, such as Apple and Microsoft, now use this pricing method.

Catchy pricing

Another method of pricing goods and services is the catchy pricing method. In this way, you will pay very little to buy the product, but to use it, you will need to buy and provide other accessories or services. For example, you may get a credit card with a very low price, but have you thought about the subsequent costs of activating its various programs ?!

Collection pricing

Another pricing method that will be more suitable for large stores with a variety of goods is set pricing. In this method, the company or store puts several related products in one package, the price of which is lower than the price of individual products. With this strategy, the company and the store can also sell their low-selling products.

Geographical pricing

Another pricing strategy for goods and services is geographic pricing, which is used in all countries of the world. In this method, the price of the product is determined by its availability or non-availability in the geographical area. For example, it is natural that the price of a natural product in a city and country that is found in abundance will be lower than in a city and country that is rare.

Pricing based on desired returns

Return-based pricing is another pricing strategy that companies and reputable brands such as General Motors have chosen for pricing. In this way, you will determine at the beginning of the work what is the return on your capital in a working period? Then you will determine the price of your goods and services based on that.

Prestige pricing

In this pricing, the brand first shows the quality level of its products and services to the target community through appropriate advertisements and expresses its so-called work prestige. It then considers the appropriate price for its product. This pricing method is commonly used for products such as perfumes and colognes, jewelry, cars, hand-woven carpets, etc.

Pricing based on product life curve

Other methods of pricing goods and services include pricing based on the life curve of goods or services. When you offer a new service or product, the product or service will naturally enter a life cycle that includes introduction, growth, maturity, and decline. Naturally, you can expect the highest prices as you grow, but you will have to lower your prices as your customers decline to stay competitive.

Discount pricing

Another popular pricing strategy is the discount method, which can have a huge psychological impact on the customer and make him buy. We are all faced with discount coupons, end-of-season discounts, buying a number of items and receiving a free item, and so on. If you have also made a purchase at least once in these discounts, you will notice the effect of this pricing method.

Multiply your sales pricing with these simple ideas

In the above sections, we learned about the concept of pricing, its importance and methods. In this section, we want to share some pricing tricks and ideas with you that can increase your sales many times over.

Do not consider the same price for similar products!

If you have a chewing gum factory and you have two chewing gums with similar characteristics, do not consider them the same price. Choosing the same price in such cases can confuse the customer. You may be interested to know that this pricing trick can increase your sales by up to 30% compared to the previous case.

Increase prices rationally

If you raise the price of your goods and services all at once and unreasonably, you will probably lose a lot of your customers. Research shows that a 10% price increase is something that customers are not defensive about. Therefore, when pricing your goods and products, avoid sudden price increases.

Present the products in appropriate formats

 

Conclusion

Pricing is one of the most important principles of business success, whether you are entering the business world for the first time or staying competitive. Therefore, different pricing strategies and methods have been defined, each of which should be selected according to the field of work and the desired goals.