Everything Is in the Price
There are entrepreneurs who struggle to make the right pricing with their products. If you are one of them, you might need to learn a thing or two when it comes to pricing your commodities because they said that success is in knowing how to price right. Everything is in the price after all.
It is important for every entrepreneur to do the right pricing, because one wrong move will cost you a lot, and you would never want that, right? Because you see, if you price your product too low, you will miss out on the much wanted profit; and if you price your item too high, you will miss out on the much awaited sales.
So how do you know if your price is right? Or how would price your items right? To answer these questions, here are a few things to know and understand:
- The decoy package – Dan Ariely, an Israeli American professor behavioral economics and psychology made a study that is quite useful for entrepreneurs when it comes to pricing. According to his study, when offered two different types of options, people almost always have a hard time choosing. So to help them, offer a third option, which is the exact opposite of either option A or option B. For example, if you are offering people a) one night stay in a five-star hotel or b) one night stay in a luxurious resort.
Both are great options and people would have a hard time deciding what to choose. So, to help them, include a middle option. Here are now the new selections: a) one night stay in a five-star hotel with free dinner, b) one night stay in a five-star hotel without free dinner, or c) one night stay in a luxurious resort. With those options, Ariely said that more will choose option A. According to him, if you apply this in your business, adding a decoy package or plan next to the offer you want your consumers to choose, then the success rate will likely to be great.
- The number 9 trick – Have you seen items with prices ending in 9? Surely smart people realize that $29 and $30 are basically the same. However, the trick of pricing your items with a 9-ending, according to studies make more sales than those who doesn’t have the 9. Number 9 indeed does the trick, and until now, it cannot be explained how.
- The anchoring and contrast method – It is said that nothing is too expensive or too cheap by itself, unless it is compared to another item. For example, a $5000 watch is either cheap or expensive, unless you have another item that costs $10000. See the logic? The smartest way to sell a $6500 necklace? Put it right next to a $15000 choker.
These are just some ingenious ways to help make your sales go up. When you struggle with the right pricing method, take a look and remember those pricing principles.
Every entrepreneur should be cautious when it comes to pricing because everything is in the price. It is important to do the right thing when it comes to pricing to make your business a success.