There are a number of different pricing strategies your business can use.
How you set up your pricing strategy is an important component of whether your business will be successful.
Below you’ll find the various types of pricing strategies you can use.
Specific Strategies:
Cost-based Pricing
This is when you add a small markup to the cost of creating your product or providing your service.
You need to be careful and deliberate when determining all of the actual costs involved in creating your product when using this strategy.
Per Hour Pricing
This is used with service-based businesses when you offer services at an hourly rate.
With this method, it’s essential to understand the costs involved in providing the service including taxes, your own wage, entitlements, superannuation, and continuing education.
Going Rate Pricing
This pricing strategy uses the going market price to determine the price of your products or services.
It’s a good way to stay competitive without eating into profits.
But keep in mind that if a competitor is more established and they have the same price as you are, they may get more business than you do.
Value Pricing
This strategy is based on pricing your products and services based on their perceived value by your potential customers.
This can be established through market testing.
Premium Pricing
This strategy is highly involved with the positioning of the product or service and usually involves luxury or exclusivity.
Premium price customers expect a high degree of service, quality, and performance.
Penetration Pricing
This pricing strategy offers your products or services at a low initial price to gain a high degree of market share and reputability.
Once you reach a certain saturation in the market you increase your prices.
Skimming Pricing
This strategy sets a high price that excites potential customers who wish to purchase something that’s highly valued or in high demand.
Once the desired profits are made the price is lowered.
An example of this is how clothing is slowly marked down in stores through time.
Loss Leader Pricing
This strategy offers a product or service below cost with the hope that potential customers will also purchase other products or services alongside it that have a much higher profit margin.