Price is one of the biggest factors in a consumer's buying decision. Most buyers compare prices from different sellers and determine which offers the best deal. This raises the question, "Are you charging your customers right?"
It might seem easy — you allot a price on a product to make up for the production and marketing costs. Product pricing goes beyond that, though. You can charge too much and end up losing customers, or you can charge too little and risk business failure.
To make sure you are on the right page when it comes to product pricing, here are some pointers you can follow:
1. Ensure your vendors are following your product pricing.
If you have multiple vendors, make sure they comply with the Minimum Advertised Pricing policy. One way you can do this is through map policy enforcement, as PriceManager.com suggests. Be diligent in sending compliance issues and tracking MAP violations, so vendors will follow the pricing threshold you set. This helps you maintain brand value and protect your seller margins.
2. Gauge your customer's behavior and willingness to pay.
How do your customers react when you offer discounts? What is their initial response when a new product comes out? Your customer's behavior and willingness to pay for your products should be a factor in pricing. Do a survey and get their feedback, so you know how customers value your product.
3. Understand the market demand.
Knowing what customers want will give you a clear idea of how to diversify your product offers. Customers are more likely to purchase from a business if they have multiple options. As industry authorities illustrate, customers sort the bad options from the good ones, leading to a perceived product value. This perception drives them to make a buying decision.
Product pricing is both an art and a strategy — you have to be creative and wise in applying the right charges to your items. This way, your business remains afloat and ahead of the competition.