There’s a whole branch of economics dedicated to pricing called behavioural economics. Instead of having to read all the research I’ve given you some quick tips you can take away and use today.
- If you put your prices up by 1%, 5%, or 10% would your customers notice? Depending on your turnover, 1% could make a dramatic difference to your profit. It’s worth playing around with these scenarios and asking ‘what would I need to do to charge X% more?’
- Think about what your image says about your prices? Are you a Waitrose or a Pound shop? You’ve got to be consistent, if you charge Waitrose prices and look like a Pound shop (or give Pound shop service) then don’t be surprised when your customers go elsewhere.
- It’s all in the head. Most of the objections to your prices (and putting your prices up) is all in your head. Your customers don’t see things in the same way you do and most of them are not as price sensitive as you think. You need to work on your own thoughts first so it’s a really good idea to write down what you do for customers that your competition doesn’t. If there’s nothing then you need to rethink your business. If there’s no difference between you and your competitors then your customers only have price to choose on and will go for the cheapest option – that only makes sense!
- Charge different customers different prices. Big business does this all the time, think about premium brands v economy. It could be Innocent Smoothies v Tesco’s own brand. An Innocent smoothie is almost 3 times the price. I have loads more examples of this that I’ll cover in another blog.
Pricing is something you can control, once you control your own impulses around this. Once you do this and bite the bullet you will see a dramatic difference in your business.