Business owners face a number of important decisions, one of them being pricing. A great pricing strategy helps you determine the price point where you can maximize profits. When setting retail prices, consider production and distribution costs, competition costs, positioning strategies and the ideal customer or current customer base. It’s a lot to think about no doubt. However, when setting your prices, consider these 8 common retail pricing strategies.
Discounts are the top retail pricing strategy according to recent research. 97% of retailers surveyed say they use this particular approach. These can be based on product quantity, customer loyalty, specific promotions, etc.
Multiples of the same product are sold together for a single price. For example, selling 3 pairs of gardening gloves packaged together vs. one pair. The package deal is less than what it would cost to purchase each pair individually.
3. Price High Then Discount
Retailers will sometimes price high, but discount at low prices so that they don’t incur a loss.
4. Penetration Pricing
This requires research on competitors so you can price just below the competition’s lowest product costs.
The MSRP is the manufacturer’s suggested retail price. This helps maintain profit margins and brand perception.
6. Price Lining
This is created in tiers to help showcase quality of products within categories.
7. Psychology Pricing
This is when you play on your customer’s emotions rather than logical thinking. For example, it’s proven that a product priced at $99 sells more than a product at $100, even though the difference between them is minimal.
8. Price Skimming
This strategy is designed to help businesses maximize on new products. It involves setting rates high at first and lowering gradually as competitor goods show up in the marketplace.
After you choose your retail pricing strategies, don’t forget to utilize your point-of-sale (POS) system. Bepoz’s POS software can help with the reporting and analytics of your store’s real-time sales data. Give us a call today to set up a free demo and learn more about how Bepoz can help your business grow.