There are a number of pricing strategies that you may want to adopt throughout the course of your business depending on the situation. Here you should describe the pricing policy that you wish to adopt as a start-up business. There are several pricing strategies that you could consider using, including; introductory offers, promotional offers, discounts, special offers, market penetration pricing (low introductory prices to grab an initial share of the market).
One important thing to remember here is that it is very easy to lower your price, but much more difficult to raise your price back up again. Your pricing over time should be stable (once the introduction period has ended, for example), and you should avoid confusing the market by frequently raising and lowering your prices.
Also don’t be afraid to increase your prices once a year, 5% is usually an acceptable increase, higher than 5% might require some explanation. Your suppliers will be increasing their prices on you so if you don’t at least pass this on it will eat away at your profits. A 5% increase is not really that much and some customers may not even notice this marginal increase. However over time, this will impact your profit considerably. Always advise your existing customers of a price increase (however small) and briefly have a courtesy statement as to why this increase is necessary, a increase from suppliers and the time since the last increase will usually suffice.
For some products and services, you may be guided by the price that the market demands (what the competition price is), however if your product or service is clearly differentiated then your price should be considerably more than the competition.
Finding The Right Pricing Strategies For Your Business
Higher pricing strategies should always be monitored to make sure you are not pricing yourself out of the market. Provided you promote your product extensively and regularly and maintain your point of differentiation, then you are on the right track. Have you ever seen recently produced Apple products discounted? Have a matrix that identifies what products or services that you offer and where they sit in the overall scheme of things. a suggested matrix (that I use) is shown below.
This gives you a quick snapshot of where your products sit in each of the markets you are in and how you might structure your pricing. The model serves as a justification for your pricing strategy based on a number of factors. You may decide to change Moderate, Medium, High’s and Low’s with percentages if you wish.
Keep an eye also on the last time the product or service was updated or modified. Your customers will not be too keen on buying an outdated product or service particularly if the competition has new and regularly updated products that compete with yours on every level.
A simple change in packaging or a slight modification can maintain (or even increase) your price and a promotional campaign around all this can relaunch this product to even greater levels that before. Think what Apple did with the existing iPhone 5, which became the iPhone5c and 5s and how they reinvented the product and made even more sales the second time around.
I know now you are thinking well that’s all well and good but I’m not Apple, I know you are not! All I am saying is you think about some of their marketing methodologies, and how you could apply some of these into your own business. When I train businesses in marketing strategies I always use Apple as a good example.