Pricing

Pricing Techniques

Open your mind to some more creative pricing opportunities. Only one or two of these choices could be the key to making your business unique. Take a chance. Test some of the methods. Use them on special occasions. Have fun. Be the first in your industry to adapt one of these strategies to your business.

Some of these strategies are variations of the basic pricing methods previously discussed. Some are new strategies that could be the foundation for your whole business pricing decision. Many are extras you can add or use on special occasions to help stimulate interest. Use your imagination and see how many you can apply to your business.

Skimming Pricing: Set initial prices relatively high to recover the initial capital spent developing the product or opening a store. Feature quality, service, and uniqueness. Competition will often force lower prices. Use skimming if you are one of the first out with new technology or are capitalizing on a current trend or fad.

Penetration Pricing: Set initial prices low at first to quickly penetrate the market. As business develops, gradually raise prices to a more profitable level. Feature low prices and convenience. This is a good pricing technique for generating immediate cash flow. Don’t set the price so low that customers believe your product or service is inferior.

Promotional Pricing: Set special low prices to introduce new products or lines. Consider two-for-one specials, end-of-season sales. Utilize this method to maintain traffic, stimulate demand, or make room for new merchandise.

Loss-Leader Pricing: Select one item, and advertise it at below cost to create store traffic and sell other regularly priced items. Make sure you have the items in stock and plan to sell them without trying to illegally “switch” customers to higher-priced items. Loss-leader pricing is appropriate for items that already have low margins, but can drive sales of accessories or related items.

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