Knowing how to price your product or service is a crucial aspect of business strategy, and one that often creates challenges. It’s very easy to under-price your offer.
How do we put a value on what we offer our customers?
I used to encourage my team to price to the market, rather than use a cost-plus model, but when that generates a healthy margin people get anxious it won’t sell.
So here are some valuable tips to build both your pricing strategy and internal confidence:
1. Understand Your Customer's Perspective: Step into your customer's shoes. What do they value most about your product or service? Understanding this is the cornerstone of value-based pricing. What is the problem or pain you are solving and what is the cost of them not adopting your solution?
2. Articulate Your Unique Value Proposition: Clearly define what sets your offering apart…not the features which is an easy trap to fall in. Highlight the unique benefits that make your product or service indispensable.
3. Segment Your Market: Not all customers have the same needs. Segment your market and tailor your offer and pricing to different customer segments based on the value they perceive.
4. Transparent Communication: Be transparent about your pricing strategy. Customers appreciate honesty. Clearly communicate the value they receive for the price paid. To do this it helps to make them see what the outcome will be if they don’t adopt your product or service, and what the outcome will be if they do. Your offer is the bridge between the two.
5. Consider the Whole Package: Don't just focus on the product or service itself. Consider the entire customer experience. A comprehensive package adds perceived value.
6. Customer Feedback Loop: Considering the whole package is much better if you know what’s most important to your customers, so actively seek customer feedback. Understand what aspects of your product or service customers value most and let that guide your pricing decisions.
7. Competitive Analysis: Know your competitors. Analyse their pricing strategies and position your offering based on the unique value you provide.
8. Offer Options: Provide different pricing tiers or packages. This gives customers the flexibility to choose based on their needs and budget, maximizing perceived value.
9. Adjust Pricing Strategically: Be flexible with your pricing strategy. Regularly reassess and adjust based on market trends, customer feedback, and changes in your offerings.
10. Trial and Iterate: Consider offering trials or pilot programs. It allows customers to experience the value first-hand, building trust and loyalty.
A lot of these tips were learnt the hard way! I've over 20 years experience in sales and marketing leadership roles in both B2B and consumer markets, and now want to help others have a much smoother journey to a prosperous future.
Remember, pricing is not just about numbers; it's a reflection of the value you bring to your customers. By pricing based on value, we create a sustainable and mutually beneficial relationship.
If you're unsure what your value is, get in touch and I can help you create a strategy for success www.forwardthinking.ltd/south-manchester .