Introduction

In free markets, competition is the norm not the exception, and that competition will limit your latitude for pricing. When competitors lower prices or new competition enters at a lower price, your gut reaction is probably to lower prices too - but the cost of giving price concessions may be higher than the cost of customer losses. Surely there's an easier and less costly way to identify the proper reaction to competitive price moves?

Pricing is one of the four elements of the marketing mix, along with product, place and promotion. An effective pricing strategy is vital for companies who wish to achieve success by finding the price point where they can maximize sales and profits. Companies may use a variety of pricing strategies, depending on their own unique marketing goals and objectives – and also on which industry they represent.

Costs (direct or indirect) are the expenses that a business incurs in bringing a product or service to market. The selling price is the amount a customer pays for that product or service. The difference between the price that is paid and the cost that is incurred is the profit the business makes when the item sells. If a customer pays £10 for an item that costs the company £5 to produce and sell, the company makes a £5 profit.

The Pricing Challenges as a Manufacturer

Manufacturers face their own unique pricing challenges: ever-changing products and the challenge of accurately estimating a fair market price/value for those products.

A subscription-based pricing model is a payment structure that allows a customer or organization to purchase or subscribe to a service for a specific period of time for a set price. Subscribers typically commit to the services on a monthly, annual or seasonal basis.

Introduction

Online retailing continues to expand nationally and globally – as customers abandon historic high streets and shop from home or on the go. Two examples of online retailers challenging traditional purchasing behaviours include VictoriaPlum.com and ASOS. 

In Part One we looked at B2B Pricing Challenges. In this following on article, we're exploring Business-to-Consumer Pricing Challenges (B2C). Charging the correct price for your product or service can be a tricky business – getting it right (or indeed wrong) can have a dramatic effect on your sales and profits.

Everyone knows that they will have to pay for a product or service at some point, it's just a question of how much. Recently, however, it has become noticable that customers are proving to be tougher negotiators, both B2C and B2B. When it comes to selling, pricing is much more involved than just sticking some numbers on your goods and hoping for the best.

There are lots of reasons to review and increase your prices at regular intervals - it's a normal part of business. Effective and fair pricing helps grow customer loyalty and relationships. Fact! Steep pricing hacks are going to turn customers away so you've got to be more sassy and subtle in the way you raise prices. Small pricing hacks can be beautiful sometimes! The important things are to know your customers, know your industry, and experiment until you find a fair pricing level that works best for you and your business, without alienating customers.