How to craft customer-centred pricing strategy (I)
When an entrepreneur sets out to provide solutions to a set of problems, one key component that determines how far and high the product flies is pricing strategy, which segments customers efficiently, contends smallstarter.com an online business website.
You can set any price you want, but if your target customers cannot afford it, your business will not sell anything. That is why it is always a good strategy to analyse your market and study your potential customers when you are setting prices for your products or services.
Do not forget, if your price is too low, people may think you are ‘cheap’. Others may think there is something ‘fishy’ about your product and may not buy. On the flip side, if your prices are too high, people may not buy at all.
So, how can you know the best price to set for your product? One simple advice: Know your customer!
By studying your target customers’ behaviour, likes, dislikes, preferences, tastes, lifestyle, income levels etcetera, you will gain a lot of insight that will help you to set the right prices for your products or services.
There are three main types of customer groups you should always consider when you’re setting prices. Here they are:
Price-sensitive customers – for this group, price is the most important factor that affects their buying decision. They may be working with a budget or just be bargain hunters who like to buy things at the lowest price possible, no matter the time and effort it costs them. Most times, no matter what you promise, this group of consumers will not buy what you’re selling unless your prices are the lowest they can get.
Convenience-centered consumers – this group of customers value convenience more than everything else. They are not willing to suffer any inconvenience just because they want to find the lowest prices available on the market. They will gladly buy a product or service that is nearest to them and easiest to buy or use. This group of customers is willing to pay a higher price to avoid hassles and enjoy the convenience.
Quality or status-conscious customers – this group will pay anything to get the best quality of a product or service. Most times, they are willing to pay a much higher price to get the most value from a product or service. Because they can afford it, price is never really a problem for this group. As long as you can meet their quality needs, they’ll gladly pay.
Lesson for entrepreneurs
To succeed with this pricing strategy, you need to know which of these groups makes up the highest proportion of your target market.
Providing home-delivery services is a strategy that will appeal to convenience-centered customers. Offering volume discounts (like “buy two, get one free”) will attract and work very well with price-sensitive customers. Providing “elite” and exclusive products and services will work well with quality and status-conscious customers.
Always remember that to get the best results from this strategy, you have to do your homework and study your target market very well. The more you know about your target customers, the better you can set a price that will appeal to them.
Putting your customer first is a strategy that always works!
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