It is a busted fact that product pricing is one of the sure-shot ways of establishing business properly. When products are priced accurately, they determine the sales and create a foundation for a business that is sure to bloom.
But did you know that getting the price strategy wrong may create business problems from the very start? Therefore it is important to follow various pricing strategies to create a niche easily in the online space.
What Are The Different Types Of Product Pricing?
We already know that price is an important aspect for every customer. It is also the numero uno factor for determining whether a product will upscale the market or remain stagnant.
Due to all these above-mentioned factors, it is equally important that you price your products equally so that they drive maximum profit for your venture. This also brings us to the different types of product pricing. Let us first discuss the distinctive types of product pricing available.
1. Product Line Pricing:
Product line pricing refers to the process of setting prices for different products in accordance with the other products. This process allows maximizing the sales because instead of looking at each product separately, you have a chance of creating more complementary products for sale.
2. Captive Product Pricing:
Captive Product Pricing is mainly intended to maximize the revenue of your business easily. This method follows the strategy of core and associate products. For example, when you buy a printer, you will also have to purchase the ink. In this above scenario, the price of the printer will be set at an economical price range, but the ink will be on a higher edge of the scale. This will allow the company to generate more revenue through the sale of printer ink.
3. By Product Pricing:
The By-Product Pricing is a method in which a business or a company generates a greater advantage by selling the by-product. This product pricing strategy also helps the company reduce the cost of the primary product as much of the profit is driven through by-product sales only.
4. Optional Product Pricing:
The optional product pricing is actually followed by all the big and small businesses today. It is a holistic approach in which the basic product is set at a low cost, and the additional accessories that come with the product are priced at a significantly high price.
5. Cost-Based Pricing:
Cost-based pricing takes into account the total cost and then the percentage before setting up the final price. The percentage markup in cost-based pricing includes material cost, labor cost, and total overhead cost.
6. Dynamic Pricing:
This is also called demand-based pricing in this method; companies set up flexible prices based on the current market scenario and customer demands.
7. Product Bundle Pricing:
Product Bundle Pricing is a process in which a set of goods are sold at a higher price. This method helps the seller drive maximum profit as a whole lot of products together, individually, resulting in the loss.
Tips to Price a Product
Till now, we have discussed and known the various types of pricing strategies. While setting up the product price is a salient part of your business, but that is not enough to make your business run in the long-term. There are other factors and strategies that determine the price of a product. Let us check out the best ways a product needs to be priced:
1. Knowing Your Customer:
This is the first and foremost step in pricing the product. Before you head out towards the in-depth pricing, it is important to have considerable knowledge about potential customers whom you are going to pitch the product.
Take a look at the customers who are budget sensitive and convenience centered along with status concerned customers. Only then can you segment the price very well.
2. Revenue Target:
It would help if you also had a chart for the lump sum revenue you are targeting in a specific period. Only then can you target the product pricing strategies carefully. Keeping an estimate of the number of units that the company is about to sell within a year will only prepare you beforehand about the profit target and revenue to be incurred.
3. Monitor Your Pricing:
It is yet another feature of the new product pricing strategies. This strategy helps you to focus on individual profits made rather than overall profitability. This can be achieved by taking a look at these factors also:
- Keeping tabs on competitors.
- Getting feedback from customers on pricing.
- Always keeping a budget action in place.
4. Knowing The Cost:
One of the absolute ways of setting the prices includes covering the basic cost and then moving towards profit. Through this factor, businesses can ensure that they are getting back what the initial investment every month apart from making a profit on a basic scale.
Apart from these strategies, the market today also abounds with the product pricing calculator, which helps you set the price very easily. These tools consider various factors before creating a reliable data-backed price structure for the list of products.
Dropship Hot Selling Products at Wholesale Price
Dropshipping today has become an inseparable part of e-Commerce companies. The process involves a third-party seller from who companies purchase and ship the product directly to the customers.
The biggest takeaway from dropshipping is that sellers do not own or keep in stock the inventory and thus saving big bucks on launching the inventory.
Dropshipping provides wholesale prices for the sellers.
One of the leading examples of drop shipping business is SaleYee platform. The site is a wholesale supplier operating and has its wings up to 630,000 warehouses. With 24 x 7 customer support, the online site has made dropshipping easier with its wide variety of goods. You can get access to a wide range of products at wholesale prices.
Conclusion:
Your business is the reflection of your strategies and models. Therefore, choose the prices carefully as they can become the paramount determiners for your venture's success or loss.
