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Should Your Pricing Strategy be Simple or Complex?

There is undoubtedly a desire from both Sales and Marketing professionals and consumers for a simple, easily understood pricing strategy.

What is Promotional Pricing?

Promotional pricing is a powerful sales tool, used to increase the demand for a product, particularly among price-sensitive consumers. This marketing strategy involves reducing prices by a certain percentage for a limited period, hence, positioning an item as on sale. This tactic is often employed when launching a new product line as a way to incentivise sales. Today, we'll explore promotional pricing in detail and take a closer look at its forms, benefits, and drawbacks.

Change can be difficult; sometimes it's much easier to carry on as we are and not try to rock the boat.  However, when it comes to pricing it's not a good idea to stick with the same old, same old (or, indeed, to bury your head in the sand). 

What is Decoy Pricing?

Decoy pricing is a clever strategy that guides potential customers towards a specific product by presenting an inferior alternative. This approach is achieved by creating an additional version of the product solely to make the higher-priced options appear more economically favorable. By compelling individuals to compare pricing options, the decoy effect comes into play, resulting in increased sales of the more attractive, higher-priced item.

Have you ever noticed how frequently products are offered in three different options? While part of it may be attributed to businesses wanting to provide varied choices to customers, astute marketing takes advantage of the decoy effect to steer customers towards the priciest purchase, rather than the one they might typically choose. Our brains tend to disregard the cheapest option, regardless of its suitability for our needs, as it seems inferior in comparison to the rest. This psychological bias is skillfully utilised by companies to influence consumer behavior and maximise sales.

Amazon’s 2020 has been strong with accelerated growth during lockdown.  When online spending rose, 1 in 3 online sales in the UK was attributed to them.  Now,  with the expansion of their services to include grocery delivery, their growth has continued.

Find out how to get the most out of Pricing Software

So, your business has made the decision to implement a pricing tool such as BlackCurve. Fantastic! You’re well on your way to get an average 1% - 3%+ gross margin improvement.

This is because pricing tools help maintain pricing accuracy, make the pricing process more efficient and effective, as well as help you identify better price points for your goods and services that drive overall business growth.

No matter what product or service you sell, the price you charge your customers or clients will have a direct impact on the success of your business.

A truly effective pricing strategy should:

• Communicate your value
• Position you in the market
• Reinforce your revenue strategy
• Allow you to invest in continuing innovation

Strategic pricing sets a product's price based on the product's value in the eyes of your customers (or potential customers) rather than on the more usual cost of production plus a markup.

If your end of year results turn out to be poorer than expected, is this always the time to change your pricing strategy? 

None of us are perfect and we all make mistakes - come on, even you!!  Well, some mistakes can be quickly mended but other mistakes cost us money and when it's your livelihood that's a very serious matter.