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Pricing To Your Market

A foundational step when working on your marketing is how to price your product or service. There is a lot of psychology that goes into buying a product or service and a lot of the way we value something is set by the price. If you price something too low, the market might perceive you as cheap and nasty. If you price something higher than your competitors, you might be perceived to be a higher quality. Therefore, you need to work out where you want to position yourself in the market. Do you want to be a high volume business with a competitive advantage on low costs and efficiencies, or do you want to focus on providing high quality product or service to your customers. Both strategies are fine, but you need to be clear on the market you are targeting.

Case Study

Imagine yourself walking into a clothing store and looking at a rack of jeans. There might be two pairs of jeans that look and feel exactly the same, however one has a price tag of $49 and the other is priced at $180. Without any other information, which pair do you choose? Every buyer will make a different decision based on their experiences and perceptions. A student might choose the cheap jeans as they are living on a very tight budget, however a tradesman might decide to go for the expensive jeans as they think they will last longer, which is important to them as they don't have time to go shopping for new jeans all the time.

Pricing is an important business decision and needs to be made early. As Seth Godin says, it is better to apologize once for the price than have to excuse a hundred small slights again and again.

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