7 Mistakes in Pricing to Avoid

Price is an important factor that determines the success of your business. In running any business, various methods and approaches are used by entrepreneurs to set the best prices that can compete with other businesses. Increasingly, the level of buying and selling through e-commerce or online stores is getting higher and more competitive.

With online sales, your business does not only compete in one city, but with all similar businesses throughout the country and even abroad. Therefore, the pressure to optimize the best pricing is greater and continues to grow. The way or approach to setting the best price for your business may vary greatly to choose from.

Mistakes to Avoid When Setting Prices

Regardless of what approach you take, here are some basic pricing mistakes you should avoid. There are seven mistakes in pricing that you should avoid when running a business.

1. Assumptions regarding low prices will provide the best results

Logically, determining the lowest price can easily attract your business's target audience, but in reality this is not always the case. In fact, lowering the price of your product too drastically can reduce the perceived value to consumers. Apart from that, doubts will arise about the quality of the product if the price is too low, which will impact sales.

Instead of sacrificing too much profit in pursuit of high sales figures, set targets to determine product prices based on what is offered to consumers. Find your product's sweet spot on the price-quality matrix to determine how the product is perceived by the consumer base. That way, you can determine the best price for business products.

2. Doesn't provide a variety of options

Nowadays, consumers are accustomed to being presented with many choices every time they make a purchase. Be sure to offer multiple pricing options for different versions or sizes of the product. The choice of delivery methods that can be tailored to consumer needs also provides benefits. This allows consumers to customize purchases and delivery methods based on personal needs and offers differentiated engagement. This can make consumers feel more in control in choosing their purchases.

3. Not Practicing Customer Segmentation

Every consumer has their own needs and desires. Therefore, you should try to meet consumer needs. This can be done by dividing consumers into various types of individuals through customer segmentation. After doing research and getting data to determine the types of consumers who buy your products, adjust some approaches.

Approaches that can be taken include adjusting the packaging and the way the product is presented, or by setting a product selling price that suits your target audience. The adjustments made allow you to take full control over the value consumers perceive from what your business offers.

4. Complicating the Offer

When forming product prices in your business, you need to remember to keep the price display as simple as possible. Including small details such as not including decimal points and other punctuation or avoiding the hassle of reading and pronouncing the nominal price listed. The smoother and easier it is for consumers to understand the nominal price of a product, the faster they will decide on a  purchase and payment.

5. Postpone the use of automated systems

Automated integration systems to help optimize prices are becoming one of the most useful tools in retail today. By using various key data points, this approach or method will make it easier for you to set the best product price point in terms of how high or how low the price should be set. Apart from this, this system will also make it easier for you to target certain segments of your consumer base.

6. Not Testing New Approaches

Without trying new approaches to adjusting product prices, your business may decline over time. It is important to carry out consistent testing so it is necessary to plan when running a business.

New pricing strategies are always being developed, but businesses will not be able to take advantage of them unless you are willing to provide valid new pricing techniques. Conduct A/B testing to see new ways of pricing compared to your tried-and-true methods. After that, you simply apply the tactics that show beneficial performance.

7. Not Focusing on Consumer Experience

As mentioned in the previous point, perceived value should be the most important determining factor in how to price your business products. More than your business competitors do and can offer the best deal to your consumers. It is better to follow the customer's perspective (desires and satisfaction) than to follow the company's costs too strictly.

Perceived value can place your business squarely in the shoes of your business's target audience, keeping the customer experience front and center. Therefore, it is important to always review and evaluate your business through the eyes of consumers for the development of your business and products.

In practice, running a business while carrying out trial and error brings the business to the research and data collection stage. You can continue to carry out reviews and evaluations, especially from a consumer perspective and prioritize buyer satisfaction and experience.

Through the Marketing Pricing Strategy program, company executives can understand the correct and appropriate pricing context that will determine the future of the product and company. This is not limited to just a few people's responsibilities because it involves finance, marketing, sales and production interests, making price setting very challenging.