Lessons From the Great Resignation Sponsored by VistaCreate
Elevator Pitch: How to Create One + Examples
Don't Miss Zoholics 2023!
Boost Your Blog with New Content Ideas, AI, and More Expert Tips
Digital Marketing Mistakes Most Small Businesses Are Still Making
Zoho Desk Delivers Highly Contextual and Conversational Customer Service Experiences
Ivana Taylor is the Book Editor for Small Business Trends. She is responsible for directing the site’s book review program and manages the team of professional book reviewers. She also spearheads the annual Small Business Book Awards. Ivana publishes DIYMarketers, where she shares daily do-it-yourself marketing tips, and is co-author of "Excel for Marketing Managers."
Absolutely loved the 9’s and 0’s, and the prestige pricing ideas. SO right on!!!
This is a really useful list of strategies. These bring up a lot of good ideas, I have lots of thinking to do.
Another strategy I’ve seen alot online is having the normal price of a product listed with a slash through it and then a discounted price listed right next to it. Even if the “discounted” price is the normal price and the price with the slash through it is some artificially inflated price, the customer will think they’re getting a deal.
Hi Ivana, thanks for taking the time to outline these tips from Rafi — succinctly put.
Earlier this year I joined two communities that require a monthly payment. One was $97 a month, and the other was $100 a month. Sort of a variation on the 9 and zero effect.
I’m not sure if it’s the pricing strategy or the substance, but I seem to get a lot more value out of the $100/month subscription. More than a mere $3 extra.
So now you’ve got me wondering: has the pricing colored my perception of value?
Maybe I am in the wrong market, but the prestige pricing, at least during last year, isn’t entirely popular. In fact, I resorted to it as a method to scare off customers I can’t afford to take. 40 to 0 cases in my book say prestige pricing has to be applied to right markets only.
This post sums up many of the pricing strategies available for businesses. For #1, if the price is small, personally I don’t see the perceived difference between $4.99 and $5
I remember Arby’s offers from Ohio, but I didn’t eat much there. How about Subway’s loyalty card that you eat 10 times or so in a 6 months period and then receive one sub for free when you purchase the 11th sub?
I am interested in discussing the term value pricing, then both the seller and the customer understand how the trader principle works in the business transaction.
I’m not a pricing expert, but I believe prestige pricing is alive and well. I see evidence of it all the time — from the grocery store to Web design services to consultants to restaurants.
But as you say, you have to select your pricing strategy appropriately for your market. And you can’t have a shoddy product or service and just slap a big price tag on it.
Great list! Very interesting to bring light to these common tactics.
How about the loss-leader. We did this in Pearle Vision all the time – advertise something practically at cost (contact lenses are a great example) with the hopes of the customer coming in and purchasing additional items.
When we offered the BOGO – buy one get one – we trained our associates to detail the actual full price of the free pair they would receive. If we didn’t so this – the perceived value of the free pair was non-existent. However, by including on the receipt the price of their free pair, had they paid – all of a sudden the value skyrocketed.
Just happened to me at a dress shop. I took advantage of a 50% off sale. The sales person rang up my sale, told me I owed $36.00 with tax. Then as she handed me my bag she said – “congratulations, you saved $34.50 today.”
Wow – I felt great.
This is a really interesting list of tactics and strategies and prestige pricing is quite an interesting topic. This is really, good useful advice that people can begin to implement immediately into their small business – very helpful.
If they tell me “You saved $X” I usually retort with “no I didn’t – I SPENT $X”
I find that a minor insult to the intelligence.
I like this list very much. It gives some great pricing tactics. If you want to make profit from a business, I guess pricing is an important strategy. When you are introducing a product, you should follow one strategy and when it gains popularity you change the strategy. Thanks Ivana for such a nice article.
These are some good items. I might add that customers also perceive value in paying only for what they need. In the email hosting business, we have basic plan pricing in blocks of 25 but for the guy that needs 62 mailboxes and nothing more, we can work up a price for exactly 62 mailboxes and not make him pay for 75. On the flip side, other clients perceive security in being well under a plan limit and don’t mind paying for 75 accounts even if they only need 62. Building flexibility into your pricing model and being able to please both types of customers makes the difference.
Some great tips for the new business starter. Thanks.
Thanks, these stratigies will help us with our new distribution and retail business
Always offer a bargain price for your service as best you can so that everyone can afford it. Consumers comes first, profits follow. Visit RedHotFranchises to see many Great opportunities that will help all worldwide visionary entrepreneurs to grow.
I totally agree with number 4 sometimes even just having a higher price makes people want it more, or think it”s better all else being equal. Almost make sense to always have 2 companies selling the same thing to capture the various level of pricing
Best Boots On Sale
Love this, great blog, thanks.
These are some great pricing strategies. I know I make sure to use several of these in my own online business. For instance, I make good use of discounting and bundling. I also competitors’ prices and show them near my better prices.
I like to make sure my customers feel like they are getting a great bargain. For instance, after building someone’s website I may provide a video tutorial to show them how to use the administrative side of their WordPress site. I may also provide a free ebook on how to generate traffic and make the most of social media.
Overall I make sure I underpromise, overdeliver, and ensure I am providing genuine value to my customers.