How do you determine the price or fee for your product or service? Pricing can be looked at on two fronts. Firstly, what is the least you can afford to charge, called ‘cost plus’ pricing and secondly, what is the most your customers will pay called ‘market’ pricing. Between these ‘floor’ and ‘ceiling prices you have a wide range of choice.

Click ‘more’ to see how to get it right.

Firstly, when is the best time to put your prices up?

There is pretty much one time, and one time only, when it is easier to get a price increase from your customers. Well, let’s not use the word easy. If it was easy our clients wouldn’t need our help. Let’s say less hard. If you sell Easter Eggs or Hot Cross Buns, when are you going to put your prices up? Early May? What chance do you have of getting away with it then? None whatsoever.

The time to put prices up is when demand is strong. Don’t take on extra staff, make everyone work overtime or open a new office, just put your prices up.

If you spent your Easter holidays painting the house, I hope you bought the paint back in January. If you didn’t, hard luck, because the price of paint has gone up in the last few weeks. Not much, but enough to get better profits for the paint companies

Is it easy to put your prices up when demand is strong? Absolutely not. Is it impossible? Absolutely not, as long as you go about it the right way and use the techniques we have developed over the years with clients. But if you try it when demand is low, you have next to no chance.

Can you charge more for Easter Eggs the week after Easter? No chance, you’ll be lucky to shift them at a whopping discount. So if that’s your market and you missed the boat this year make sure you talk to us so you can take advantage next year.

Whichever method of pricing you choose, it should reflect a competitive advantage. There are a number of different pricing strategies that can be applied to different business situations.

Volume Discounts.
These are designed to encourage repeat purchasing and contribute to customer loyalty. Often used in business to business purchasing to reward customers who buy large quantities or who agree to purchase specific volumes over a given period to time.

Premium Pricing.
This strategy is designed to enhance the perceived value of a product or service by offering it at a higher price. Hotels often adopt this strategy, offering additional room facilities and other attractions such as access to a gym or sauna.

All inclusive prices.
These can be used to satisfy customer demands for a price that includes ‘no hidden extras’. Car Services is a good example. Having a price that includes parts, labour and VAT clearly displayed means that the customer is perfectly clear what they are paying for.

Fee Level.
These could be adjusted according to client turnover or number of employees. So the start-up business with one person running it would pay less than an established business with many more employees.

Promotional pricing.
This method is often used in new product launches or to protect market share. You will find that many of these could equally apply to a house builder or hotel chain -

Money off current purchase
Money off next purchase
Cash back offers
More product for the same price
Discount on multiple purchase

Credit Deals & Finance Schemes
These schemes can increase sales by making it easier for customers to buy. Leasing is one example. Home improvements are often funded by staggered payments over a number of years.

Thanks to Gordon Jones, of Gregory-Jones Marketing Communications for more information visit www.successfulmarketing.co.uk