Pricing at a Premium

Premium pricing is often most effective in the early days of a product’s life cycle, and ideal for small businesses that sell unique goods.

Because customers need to perceive products as being worth the higher price tag, a business must work hard to create a value perception.

Along with creating a high-quality product, owners should ensure their marketing efforts, the product’s packaging and the store’s décor all combine to support the premium price.

Pricing for Market Penetration

Penetration strategies aim to attract buyers by offering lower prices on goods and services.

Over time, however, the increase in awareness can drive profits and help small businesses to stand out from the crowd.

In the long run, after sufficiently penetrating a market, companies often wind up raising their prices to better reflect the state of their position within the market.

Economy Pricing

Used by a wide range of businesses including generic food suppliers and discount retailers, economy pricing aims to attract the most price-conscious of consumers.

With this strategy, businesses minimize the costs associated with marketing and production in order to keep product prices down. As a result, customers can purchase the products they need without frills.

Price Skimming

Designed to help businesses maximize sales on new products and services, price skimming involves setting rates high during the introductory phase.

The company then lowers prices gradually as competitor goods appear on the market.

One of the benefits of price skimming is that it allows businesses to maximize profits on early adopters before dropping prices to attract more price-sensitive consumers.

Psychology Pricing

With the economy still limping back to full health, price remains a major concern for American consumers.

Psychology pricing refers to techniques that marketers use to encourage customers to respond on emotional levels rather than logical ones.

Bundle Pricing

Bundle pricing is more effective for companies that sell complimentary products.

Small businesses should keep in mind that the profits they earn on the higher-value items must make up for the losses they take on the lower-value product.