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The Price is Right – I Think

Consumer price sensitivity should always be on the forefront of your planning but there is another aspect often overlooked – simplicity. Recently I visited one of my favorite sandwich shops to pick up my “usual” for lunch. Normally it’s a quick stop as I know what I like and how to order it. Seems however the chain changed their pricing strategy. And because of their new advertised low price, in order to obtain my lunch with all the extras I crave the final total end-up higher. As I went through option one, two and three and so on with the cashier, it became evident I was lost in the world of pricing specials. I really can’t tell you how they arrived at the final amount.

Pricing basics tell us that if we price too high people won’t buy. There is also the factor that if a product or service is priced too low the quality is questioned. But if the price strategy is too complex and your customers are getting confused with all the offerings, they will likely decide to look somewhere else in the future. Consumers want to feel they have power over of their purchasing and knowing they have received the best price is a major part of this control. When there are too many choices and selection is littered with add-ons, it’s difficult to arrive at a decision in a reasonable amount of time. Experts say that three or less options are best for consumer’s selection.

Here are a few other hints for successful pricing. Be price intelligent by keeping your catalogue, menu or list of products and services simple and straightforward. Matching your competitor’s price point is important but you can beat them by helping your customers quickly understand how much they are paying along with the value they will receive. Show how you can provide a greater value for the same price by providing the right combination of items, price and availability. Offer a “clean” promotion too with no hidden fees or dependencies. Nothing feels more out of control than to see an advertised price and upon reading the fine print find that a purchase of ten is required. Make sure your pricing is clearly displayed whether at your store or online.

I’ve been in businesses where I couldn’t find their products displayed let alone the prices for them. Consider being more creative in your pricing while keeping it simple. For example, can you price by service rather than by hour? If customers know the end cost of doing business they tend to feel in more control. This too could prove to be an advantage over your competition. Remember that there is not perfect pricing strategy. It’s a process and requires continuous optimization. But whenever possible, keep it simple and clear.

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 Ted@tsaul.com.

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 Ted@tsaul.com.

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