Pricing Mistakes That Can Cripple Your Sales

Pricing strategy seems to be guesswork; you shoot in the dark, and you expect your buyers will be able to pay this much price for your goods. However, this kind of approach is not on in the business world. Perhaps you may not realise it, but it can seriously stifle your sales.

Your users are very sensitive to prices. If they are more than what they like to pay or what they can afford, they will leave you and go to your competitors. Likewise, if your prices are extremely lower, you will not be able to make profits.

Pricing strategy is extremely crucial if you do not want to see your business suffer. You cannot randomly pick a figure and set it as the price of your product or service. You will have to consider a lot of factors to set the prices for your products and services.

Pricing mistakes that you should avoid

Here are the pricing mistakes that you should avoid to prevent your sales from going down.

• Setting prices in order to undercut your competition

It is not uncommon to see that some people set prices for their products or services cheaper than that of their competitors in the hope that they would be able to attract a large number of audience.

Determining prices based on mentality to show your customers that you are offering goods at lower prices than your competitors may not be the best bet as the prices you set will be perceived as value by your users and lower prices than your competitors may be looked upon as lower value than that of them.

Of course, people will hesitate to buy your products because they will think that you do not offer as much value as your competitors. If you want to attract a large number of customers, you do not need to charge lower than your competitors.

You should, in fact, offer them discounts. Offering them your products at a discounted price will likely help you attract a large number of users. It is crucial to remember that prospects need to be sold on value, and value does not necessarily mean a lower price.

• Not understanding the price sensitivity

Most of the companies do not understand that a one-size-fits-all price strategy does not exist. Every user has a different need and different perspective when it comes to buying a product. You should segment your audience and accordingly set the prices.

This problem can be solved by creating a detailed persona. You will have to figure out who is buying your product, what interests they have, what they oftentimes buy, and their budget constraints. If you create a detailed buyer persona, you will be able to set the right pricing strategy for each segment of your users.

• Overcomplicating the price presentation

Another mistake that you often make that can damage your sales is overcomplicating the price presentation. The way you present your prices can drastically affect the decision of your buyers. For instance, you have something to sell at £1199. You can present the prices in three ways: one of them is aforementioned and the rest two ways are £1,199 and £1,199.00.

All these three are the same prices, but if you use the second and the third way of presentation, you are simply overcomplicating the price presentation. This will make users feel that it is too high. They cannot afford it, and they will likely drop the idea of buying from you.

If you simply mention £1199, they will find it cheaper. This happens because this does not include any additional comma or punctuation. You can understand better by this example. Have you ever wondered why prices are often mentioned in 99, not in complete value?

For instance, the price of a shirt is displayed as £199, not as £200. The logic is simple. When you see the price of a shirt, £200, you find it expensive and when you see the price of the same shirt £199 you think that the prices have reduced by half and you immediately get ready to buy it.

You generally focus on the beginning digits. Two seem to be twice the one, and you do not heed the last two digits. You should present the price in a way that does not dissuade your users.

• Not considering how it will affect the competition

As you are spying on your competitors to see how they are influencing their buyers and what prices they have set for their products, they are also tracking you what pricing strategy you have set for them. Do not forget that your pricing strategy will affect the movement of your competitors.

If your competitors are competing against you, the fluctuation in your pricing strategy will definitely affect them. They cannot turn blind eyes to what is happening. Price changes can have a direct impact on your industry.

This is why it is recommended that you should consider the impact of your price changing policy on the existing competition level. If you do not want to be taken aback, you should change your prices after considering its impact on your competitors.

To gain an insight into it, you should take a look at competitors offering the same products and services. Whether you are increasing or decreasing the prices, make sure that you will not have difficulty meeting your business operations. However, if you still have difficulty meeting your expenses, you can take out debt consolidation loans for bad credit In UK.

• Not having a goal behind your pricing strategy

There is no point in having a pricing strategy without a goal. You cannot make an immediate change in your pricing strategy if you are clueless about how it is going to help you. Do not make any changes in your price strategy without knowing what you want from it.

For instance, you should have a clear goal, whether you want to grow your customer base or simply aim at increasing your profits. Having a clear objective is essential to make the most of your pricing strategy.

The bottom line

You cannot generate revenues no matter how good your products are if your pricing strategy is not apt. It is something that you cannot randomly do. Whether you are going to increase or decrease the prices of your products, you need to ensure that you have a goal for doing so, and you will achieve it.

However, at the same time, it is crucial to evaluate its impact on your competitors as their move can affect the impact of your decision on your revenues. If they also come up with a price changing strategy, it can affect the number of customers buying from you and, naturally, your profits.

When you introduce a change in the prices of your products, make sure that you are able to make enough profits to meet your business expenses. However, if you still need some money, you can borrow money from an online lender. If you borrow money, you need to ensure that you can repay your debt.