We all talk about meeting or beating the competition’s prices, but that doesn’t ALWAYS mean pricing LOWER than your competitors. You’d be surprised how many times we've added new clients at Upstream Commerce -- companies managing thousands of products -- who had no idea how many opportunities they had to price competitively -- until they began using a pricing intelligence tool and saw how their products and prices compared with the competitions' pricing. Here are some ways you can command higher prices, too:
#1. You discover you’re charging quite a bit less for a product than your competitors are.
Your pricing intelligence reveals that you are charging LESS for a certain product, maybe even a lot less than your competitors, so there’s room for you to charge more if only you knew it. Let’s say you sell a specific model of boot in a specific brand. Your pricing intelligence shows that your competitors are charging forty more dollars than you are for the exact same pair of boots -- or, worse, they may even be out of stock of this particular boot (see #2, below). It would be ridiculous for you to continue at your low price when you can raise your price significantly, still be competitive, and take home money you’ve been leaving on the table.
#2. Your competitor is out of stock
Your pricing intelligence tool gives you information about your competitor's stock availability and you find out that he/she doesn’t even have a particular product in stock. I’ve seen this happen a lot more than you think. That's why you need a pricing intelligence tool -- to check the competition often and know what's going on at all times. Your pricing intelligence tool will tell you when your competitors are out of stock, which might be another advantageous time for you to raise your prices. When the commodity is in demand, and supply is scarce, there’s no reason to give it away.
#3. Market in niches
A niche product is a specialized product that appeals to a particular target market where there’s a demand, value and quality is recognized, few others specialize in this product, and people are willing to pay whatever it takes to get it. It could be anything from hard-to-find extra-wide shoe sizes to rare, expensive spices or herbs, to accessories for smartphones. I’m not saying that everybody should run out and start selling niche products. You should, however, think out of the box, visualize products you may have (or could carry) that fit this category, and take advantage of niche marketing opportunities. Customers who need/want this product will find you.
#4. Price for value and service
Charge more for a quality product, make fewer sales, but service your customers better. That’s what Jason Fried, a creator and distributor of web-based software apps did. And he was incredibly successful. In an article in Inc. Magazine, Fried relates that he knew he had a quality product; he knew his competition; he knew he would rather sell to fewer people at the higher price and service the heck out of the customers he would get -- as opposed to taking a low margin, having a batch of dissatisfied and neglected customers, and affecting future image and sales of the company. Or, in Jason’s words, “We're a rare company in the web-based software business -- we actually charge for things.” Most online retailers using our services will have 20,000 or more products to manage, but you might find a way to apply this strategy to something you carry -- and I like Fried’s business and personal moxie.
Image Via TolunaQuick On Econsultancy
#5. Fulfill what the consumer wants and pricing will follow
A Toluna Quick study last fall, reported by David Moth in Econsultancy, surveying 5,000 UK consumers found that consumers ranked customer service first, quality products second, and pricing third. So the consumer isn't always looking for price first. Are “high quality products” and “low prices” mutually exclusive? Listen to your customers on a regular basis by getting feedback from them about your pricing. Let them know you care about what they think. And keep an eye on what your competitors are doing.
The Bottom Line For Your Bottom Line:
You owe it to yourself and to your business to relentlessly manage your product pricing. It isn’t always about lower prices. It’s about having the RIGHT prices. And having information about the products and your competitors as well. That’s why you need the tools to show you exactly what’s happening on thousands of products on which you compete. Bottom line: How you set the prices of your products might mean the difference between the success -- or failure -- of your business.
What do you think? Please comment below. Thanks. Gilon