Top Tips when Pricing

  • Keep your price realistic after taking into account costs, resources and goods.
  • Ensure that you cover all costs.
  • Include the value of your time in your pricing.
  • Customers are not always looking for the lowest price.
  • Price low but smart. Remember, low price might signal low quality. It may also be difficult to increase price if customers become accustomed to the low price.
  • Use discounts with care. Handy to sell products with sell by date, seasonal or obsolescence items. As with pricing low, be careful as it may be difficult to recover from.
  • Know your U.S.P. (unique selling point). What makes you different? What makes you better?
  • Offer incentives – grab peoples’ attention. ‘’20% off, if purchased within the next hour’’
  • Offer 3 ranges on same product – basic, middle and premium.
  • Don’t forget about VAT. Remember, if you sell over a certain amount you will need to register and charge VAT on your product. Will you still be competitive?
  • Stay on your toes – costs, customers and competitors can change. Make sure that you are keeping up with the market.
  • Base your price on consumers’ perception of value not just costs. Good market research will help here.
  • Don’t use the same profit margin (%) across different product lines.
  • Don’t hold your prices at the same level for too long. It may become impossible to increase. Adapt to changing market conditions.
  • Don’t change your price without forecasting your competitors’ reaction. Do they have a better or inferior product? What are they likely to do?
  • Use a loss leader as a marketing tool. This is selling at below cost and making a loss to get customers into the shop.
  • Segment the market based on location e.g. charging more for a can of coke at a football match than you would in a supermarket.
  • Be opportunistic. Sometimes you can price a product with no relationship to its true value. Selling umbrellas at a premium if it rains on a summer’s day.