Pricing strategically is at the heart of all retail competition, but pricing products is no easy task. Getting it wrong can have a dramatic impact on your sales, directly affecting revenue streams. Although there are many factors that contribute to a consumer’s final choice, such as brand loyalty, purchase occasion, perceived product value, price is one of the most distinguishing factor. Ensuring you have an effective pricing strategy for your products is imperative for successful sales.
Brand positioning
Having an appropriate pricing strategy goes hand in hand on how you want to position your product in the market place. Setting a high price can suggest premium value in your product, and the opposite is true, sometimes cheaper prices can serve as indicator that your product is inferior to other brands.Pricing for different consumers
It may be beneficial for your company to charge different prices for different sets of customers. For instance, one-off sales generally carry significantly higher costs than repeat business. Implement a strategy for customers who purchase regularly, or buy add-on or related products, are more valuable and you should think about rewarding their business by offering exclusive deals or memberships that encourages them to buy from you again and again.Competing against other retailers
It is common to use competitive pricing to fill tactical rather than strategy focused needs. Competitive pricing initiatives should be used to understand the competitor’s price on individual SKUs as well as their total pricing strategy across their brand. Technological advances result more consistent, accurate and real-time data. This enables a retailer to look at trends within the marketplace, understand the actions of competitors, and use predictive analytics to ensure their company’s value proposition remains relevant to your target market. When reacting to competitor’s pricing and starting a price war, no one wins except for the consumer.Varying prices
Varying your prices on products can increase your profitability. Some tactics include:- Being a loss leader by charging lower prices for high-profile products to capture customers who will also buy higher margin products
- Charging different prices at different times of the day, week, season or year to reflect the changing demand. Food stalls might discount food at the end of the day to clear stock.