We welcome back Mark Peacock, founder of the Price Maker, a company that specialises in coaching businesses on how to set prices. Mark has a new book out called Pricing for Success and in this podcast we discuss all things pricing.
What you will learn from this podcast
In this informative podcast, Mark shares valuable insights and strategies to help small business owners and entrepreneurs effectively price their products and services. Here are the key takeaways:
- Understand customer value: Pricing is all about understanding the value your product or service provides to customers. Engage with potential customers to determine what benefits they would gain and what price range they would be willing to pay.
- Use tiered pricing: Offering three pricing tiers (basic, middle, premium) can help you capture more sales at higher prices. The premium tier serves as an anchor, making the middle tier seem like the best value. Aim to have the majority of customers choose the middle option.
- Be cautious with discounts: Unplanned discounting can significantly eat into your profits. If discounts are necessary in your industry, create a clear discounting policy and stick to it. Consider reducing discount percentages and tying discounts to specific actions, like bulk purchases or upfront payments.
- Create a pricing policy: Develop a brief, written pricing policy to provide clarity and consistency. Include your pricing goals, positioning relative to competitors, product offering strategy, and any psychological pricing tactics. Regularly review and update your policy, and ensure your team adheres to it.
- Use decoy pricing carefully: Decoy pricing involves offering a product that is similar to your premium offering but with fewer features or higher pricing, making the premium option seem more appealing. While this strategy can boost revenue, consider the ethical implications and whether it aligns with your business values.
- Focus on value communication: How you present your pricing is as important as the actual numbers. Communicate the value your product or service provides and use ranges or tiered pricing to guide customers towards the option that best fits their needs.
By implementing these pricing strategies and regularly reviewing your approach, you can boost your small business’s profitability and success. Remember, pricing is an art that requires understanding your customers, your market, and the unique value you provide.
Why you should listen to this podcast
Every business owner needs to master pricing, without a proper pricing strategy you are leaving money on the table and not maximising your revenue or profits.
This podcast gives you a template on how to create effective pricing that you can justify and will take the emotion out of any price discussions that you will have.