When businesses think about marketing, they often consider things like advertising, social media, and in-person sales. But pricing is another very important aspect of marketing that some businesses don’t consider as much as they should. The price of an item can have a big impact on whether or not people decide to buy it.
So it’s automatically a big part of the marketing process. You might be able to reach a lot of people with your ads and social media campaigns. But if they think the item is overpriced, they won’t buy it.
Price tags have been integral to product pricing for years. Marking prices on each item lets people know how much each item costs. But it also is meant to reassure customers that they’re paying the same as everyone else.
Still, those price tags might not be as important to the pricing process as you think. Instead of wanting to pay the exact same price as everyone else, some argue that customers just want to feel that the price they’re paying is fair. For instance, most customers can appreciate the fairness of giving someone a lower price if they take the time to clip coupons or build up points as part of a loyalty program.
Anil Kaul, founder and CEO of Absolutdata, a firm that applies data to business decisions such as pricing, said in an interview with Forbes:
“Similarly, airlines and hotels charge different prices for different customers for the same seat — in fact they openly price in such a way where a business customer ends up paying a lot more than a leisure traveler for the same seat, and people are fine with that.”
Pricing can be somewhat of a balancing act for businesses. If you go too low, it could have a negative impact on profits and also call into question the quality of your offerings. But if you go too high, it can dissuade customers from buying. So setting one unchanging price for an item isn’t always the best solution.
Of course having flexible pricing structures won’t work for every business. But the important thing is to think like a customer and develop a pricing structure that they will think is fair for all parties involved.
Price tag photo via Shutterstock