The price-fixing strategy is deeply analysed: how to maximize profits and sales?
Pricing is the most flexible but challenging element in the marketing portfolio. A good price not only covers costs but also reflects the value of the product in the mind of the consumer and is adjusted to the dynamics of the competitive environment.
1. Four classic pricing strategies
- Cost-Additional Method (Cost-Plus): The most robust method. The formula is: cost ÷ (1 - target profit margin). The advantage is to ensure profitability, and the disadvantage is to completely ignore market acceptance.
- Market/competitive orientation law: Reference to prices of similar products. If your product is significantly different, you can have a premium of 10-20%; If you enter the Red Sea market, you usually need to get a share of less than 5-10% of the average price.
- Value-Guidance Method (Value-Based): Based on the benefits that customers feel. If your product saves the customer $1,000 in time, then the price of $200 is still very valuable to the customer, even if your cost is only $10.
- Psychological pricing: Using tail numbers to price (e.g., 9.9, 99, 199) to make prices appear lower than they actually are. This strategy is extremely effective in retail and C-end services.
2. Balance of profit margin vs sales
High Maori tends to mean a lower conversion rate, while low run-off demands are extremely high for operating costs. In pricing, it is recommended that ** the balance point of gains and losses be measured: how many products do you need to sell to keep your capital at different price levels? The profit analysis provided by this tool can help you to visualize the risks of different strategies.
3. Dynamic pricing and price discrimination
Professional sellers usually set price gradients:
- anchor point price: Sets a product at an extremely high price, which is a “high value” for the main product.
- Promotional prices: Activate potential users using time-limited discounts, but this must be based on health base pricing.
4. Common pricing traps
The most dangerous act is “blind price battles”. If your core competitiveness is just price, you will have no way back when the cost of the counterparty is lower than you. Attempts to find premium space on functions, brands or services have been ongoing.