Pricing is not just about assigning a number to a product that determines its value. Rather, it is a strategic tool that shapes customer perceptions, influences buying behaviour, and determines brand value. In today’s competitive business environment, mastering pricing leadership is vital to help your company stand out, create a loyal customer base, and, most importantly, increase profitability.
Now, along with setting the price, companies must also be wary of the value their product delivers to the customers. Therefore, through value-based pricing, businesses can improve customer satisfaction while achieving financial success.
So, let’s dive deep and understand this process of setting prices.
Process of Implementing Pricing Strategies
Setting the price of a product is complex, but companies follow a methodical approach to arrive at a decision. Here is an insight into this approach to setting pricing strategies:
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Identify the Target Market
First, you have to identify your target market. Then, understand what products or services are ideal for them. Based on this data, analyse your competitor's pricing and simultaneously learn what price benefits they provide for their customers. This will give you a clear idea of what extra values you can add for your customers so that they want to buy your products.
These evaluations will help you to set a consumer-friendly price that aligns with the product's value.
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Consider Testing Different Price Points
Always try to set a product's price according to its perceived value. Then, start testing different prices.
Now, start your testing with a high price. When you raise the price, you will need more sales numbers and may lose some customers. However, it helps you understand how much your customers want to pay for a specific product. Thus, it becomes a significant part of pricing leadership to monitor the changes in sales volume with the various price points. This way, the organisations can understand the best price to streamline their profit margins and revenue.
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Interact With the Customers
Another impactful pricing strategy is communicating with your customers. It would help if you created a survey to understand how much they want to pay for your products/services. So, ask them some open-ended questions. For instance, you can ask them what price you would like to pay for this product. Is this price too high for you? Which price and feature combinations would you prefer for this product? These questions will help you find the ideal consumer base and determine more customer-centric pricing for the said item.
Also, a Chief Marketing Officer can create a strategy to educate users about the products' value and the benefits of the price offer.
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Adopt Customisable Solutions
You must avoid a one-size-fits-all pricing approach to build a customer-centric pricing plan. Instead, you can create customised solutions for them. This way, you can fulfil an individual's preferences and needs. As a result, you can achieve greater customer loyalty and satisfaction and build strong relationships with them.
For example, B2B SaaS companies offer various subscription levels with different pricing plans. Each level comes with versatile features and support options. First, users can subscribe to the minimal pricing plans and upgrade the subscription as their needs change. This approach helps to meet different requirements for multiple customers.
This way, the users get the products/services with customised solutions, and the pricing becomes highly satisfactory. As a result, there is a considerable chance that they will purchase the product again. Thus, it boosts sales and fosters a strong emotional connection between your brand and the users.
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Provide Additional Benefits
A business can stand out by providing additional user benefits or offers. It's an effective strategy of pricing leadership to resonate with customers, improve their experience, build loyalty, and create more value for their choices. These added advantages come in different forms, such as loyalty programs, free trials, self-service portals, exclusive content, priority customer support, free consultation, etc.
For example, a restaurant can offer free desserts or meals for its consumers on their birthdays or special days. It can also offer live music or entertainment as a special feature.
These offers make customers feel special and valued, which builds a long-term relationship with your business.
Parting Words
Offering value-based pricing can be a master stroke that makes a brand stand out. The core of this pricing plan is to focus on customer satisfaction and preference instead of profits. This creates a robust value-added strategy in the marketing ad pricing plans. Ultimately, it leads to trust between the brand and its users.
Are you looking to become a Chief Marketing Officer? Head on to the IIM R CMO course of Imarticus Learning and get moving on.
