Chapter 13
Savvy Pricing Strategies
If you really put a small value upon yourself, rest assured that the world will not raise your price.
—Anonymous
How much should you charge for your products or services? ‘Tis a question that vexes many an entrepreneur. Of course, you want to charge enough to make a healthy profit, but not so much that you drive customers away. The price you charge is also an important aspect of your brand. Thus, you may need to tinker a bit before you find that perfect price.
The Psychology of Price
You expect to pay more for a BMW than a Volkswagen because of the brands those companies have created (among other reasons). BMW aims to sell fewer products at a higher price to a wealthier and more discriminating audience. Volkswagen goes for high volume and less profit per sale. Both are valid strategies, and both work.
The price of your product carries with it great psychological impact. When you pay more, you expect more; you expect more from a car that costs $50,000 than you do from one that costs $20,000. It is no secret that there is a direct correlation between price and quality in the minds of consumers. Your task is to use that mind-set to your advantage.
For example, products with even-numbered prices are generally considered higher quality than those with odd-numbered prices. A stereo selling for $200 is thought of as better and higher quality than one selling for $179.99. If you are seeking to sell high-end items, then consider pricing them with an ...
