You can't put a price on that
feeling of making your first sale.
I'm joking.
It's strategically priced with pinpoint
accuracy so your business can start
turning a profit.
Today we're learning about pricing
strategy, the art of deciding how much
your business costs.
If you're more into reading instead of
watching, check out the article below.
And don't forget to hit like and
subscribe to see the rest of our series,
Ready, Set, Goals.
Pricing strategy follows what
big important executives call the
Goldilocks Rule.
If your product is too expensive, no
one will buy it.
Too cheap, you won't cover your costs.
It's got to be just right.
There are twelve different ways
of deciding how much your product
should cost.
Let's try each on for size, taking a bed as
an example product.
The first way of deciding is to
price for market penetration.
If you're entering a new market, you can
come in lower than your competitors.
Even if you take an initial loss,
you'll build long term awareness
and loyalty.
The second option is economy pricing.
This is considered a no-frills approach.
Cut down on as many expenses as possible.
No marketing, no unnecessary
production, nada.
Then you can get your price point
as low as you can.
Thirdly, pricing at a premium.
This option is the opposite of the
no-frills approach.
You can call this the all-the-frills
approach.
The idea is to create such a premium
unique product that no one can compete.
Then punch up the price.
Fourth option, price skimming.
Say you've got a hot new product.
Maybe it's the first car that is a bed
that is a phone that is also a closet.
With price skimming, you set the price
high right when the product launches and
everyone's excited.
Then slowly drop it back down over time.
Fifth, psychological pricing.
This is when you conduct a large-scale
hypnosis campaign on the public.
By using mind control, you force
your consumers to buy your product.
I'm kidding.
This just means using small details
of pricing to sway customers,
like charging $199 instead of $200.
Sixth, bundle pricing.
Package a few of your products together
at a great deal to drive up sales.
Don't just sell the bed, throw
in that gravity blanket and maybe
even a nighttime soothing lavender
candle as well.
Nice.
Seventh, geographical pricing.
Set a price point based on where
the buyer is.
The eighth option is promotional pricing.
Love coupons?
Who doesn't?
This is all about drawing buyers
in with lower rates for a short
period of time.
Ninth, value pricing.
When times are tough, you can turn
to value pricing.
This just means dropping the price
low to drive up sales and keep your
head above water.
The tenth option is captive pricing.
If you have a captive audience, then you
can capitalize on captive pricing.
This means subscribers to
your product or people with no
alternative have to pay what you charge.
Delicious.
Eleven, dynamic pricing.
This means the price is constantly
changing based on who was buying and when
they're buying it.
Imagine an airline or a ride share service.
They surge the price up when the
demand is high.
Lastly, competitive pricing.
This is when your pricing either
matches or beats your competitors.
If another bed brand is selling at
$300, we might price our beds at $295.
So, those are the 12 methods of
deciding how to price your product.
Sleep on it, and get that price
just right.