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Are Your Prices Too High or Too Low?

Consumer price sensitivity should always be on the forefront of business planning. Pricing basics and common sense tell us that if the price is too high customers won’t buy. There is also the perception that if a product or service is priced too low, quality may be questioned inhibiting sales.

But another aspect often overlooked is simplicity.   I ran into a “pricing conundrum”, during a recent visit to a favorite sandwich shop. Normally it’s a quick stop for my “usual” but unfortunately the chain changed their pricing options.

Because of this new and improved advertised low price, to obtain the lunch with all the same extras the total ended up higher. Even after going through option one, two, three and so on with the cashier, it became evident I was lost in the world of pricing specials. How the final price was determined is still a mystery. If the price strategy is too complex and customers are getting confused with all the offerings, they will likely look elsewhere in the future. Consumers want to feel they have power over of their purchasing and have received the best price possible. This is a large part of this control. Too many choices littered with add-ons, makes it difficult to arrive at a decision in a reasonable amount of time. Experts say that three or less options are best for consumer selection.

Here are a few other hints for successful pricing.

  • Matching a competitor’s price point is important but customers need to understand how your company offers a higher value the purchase price. This can be accomplished by providing the right combination of items, availability and cost.
  • Advertise a “clean” promotion with no hidden fees or dependencies. Nothing feels more out of control than to see an advertised price and miss the fine print which states a purchase of a minimum quantity is required. Make sure the cost is clearly displayed whether at your store or online.
  • Consider more creative pricing promotions. For example, can you sell by service rather than by hour?   When customers know the end cost of doing business they will tend to feel in more control.

There is not perfect pricing model to follow. It’s a process and requires continuous optimization. But whenever possible, keep it simple and clearly defined.


Written by Ted Saul, Sr. Staff Writer

Ted Saul is a business coach that assists with Business Plans and Project Management. He holds a master certificate in project management and has earned his MBA from Regis University. Ted can be reached on LinkedIn, TedS787 on Twitter or emailing

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