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Monday, December 07, 2015


No matter the market, developing a pricing strategy is essential for ensuring something sells. However, the price can't be determined based solely on what the seller hopes to get for it; there are a variety of factors that come into play, including demand and the current market atmosphere. There are a number of psychological tricks that come into play, as well.

Pricing Based on Market

In some situations, you can price a product as high as you want -- and no one will buy it unless they are stupid. For example, a real estate agent would advise homeowners against pricing a home $200,000 over the market price. If the homes on a street are identical, but one is priced much higher, it may attract more initial interest; after all, buyers are curious. However, once they realize it has no advantage over any of the competitors, they will certainly settle on the lower priced options.

Pricing Based on Competition

Another strategy for pricing something to sell is based on the price the competition sells for. This is a common retail strategy; store A will offer a product for one price, while store B offers it for several dollars less. In most cases, store B will have the market for that product because of the pricing difference. The only time customers would choose to buy at Store A would be due to convenience. Of course, there are downsides to this: the profit margins usually end up being very narrow. The 'race to the bottom' tactics only benefit consumers, not businesses.

Pricing Based on Loyalty

This is often called a penetration strategy. A company will sell a very high-quality product at a price much lower than the competition would. This is most often used for smaller companies trying to break into an industry dominated by giants; it allows them to get a wedge of the market share without offering any initial innovation, but through building customer loyalty, they're able to build slowly until they can compete with the bigger players.

Loss Leaders

This price strategy definition is sometimes called promotional pricing. Because the business doesn't make any profit off the initial sale, it's called a 'loss leader' -- it brings customers in to purchase other products that will turn a profit. The initial purchase is just to capture their interest. As a result, the original product is usually priced much lower than the market is asking.

Using an 'Almost' Price

This tactic is exceedingly common. Companies will price a product at $4.99 instead of $5, but because it isn't quite $5, customers don't see it as so great an expense. It's a simple way to trick the brain into believing a product actually costs significantly less than it does, even if the actual price difference is only one cent off.


These four pricing strategies in marketing examples should help you better understand how to implement them into your own business. By using smart pricing strategies and psychologies, you can begin to generate sales even if there are far stronger competitors against you.

This post comes from Sarah, an inspirational writer who is taking QLD real estate course online at NREL Australia to grow her marketing career. She is part of crews at a specialized training center for the real estate industry, working with entrepreneurs and small business owner to upskills and achieve results that raise the standards of professionalism and respect in the Real Estate industry.



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