Doug D’Anna’s latest ‘e-Wealth Daily’ article is titled “Getting Past Pricing Obstacles”. [‘e-Wealth Daily’ Article]

Doug D’Anna’s latest ‘e-Wealth Daily’ article:

Getting Past Pricing Obstacles

If you’re starting up a business, then pricing your product is something that you will need to think long and hard about. You
have to consider what the items you are selling are worth and how much of a profit you want to make on each one.

Most importantly, you have to consider your customers and what they are willing to pay for your items. Determining a price is certainly based a large part on your costs, both variable and fixed, as you don’t want to lose money on the sale. But you also have to think like a consumer.

Have you ever wondered why you see items priced at $49.99 instead of just being rounded up to $50.00? Now, of course, $49.99 is just really $50.00, so why the penny less? Well, there is a certain psychology in play when it comes to pricing an item. There are these little boundaries that, if they are breached, they can put an item into a completely new price range that may be seen as a hurdle to a consumer.

An item that is priced at $49.99 is still under $50.00. There is a feeling that you’re saving money — even if it’s just a cent. A penny to the retailer isn’t really much if you can get the customer to think that they are saving and not paying $50.00. Something around the $49.00 range is a lot better than $50.00, for example.

The same thought process could be applied to giving away a free gift with purchase. Even though this free gift could essentially be worthless, the concept of getting something for nothing is enticing to a consumer.

You could give away something that cost you next to nothing to obtain, but it could result in someone buying more than they
normally would. What about “buy two, get one free” sales? If you want to boost your sales during the weekend, then that third item really doesn’t amount to much, because you’ll have sold twice as much to make up for it.

The point is that you have to appeal to the consumer’s need to get a deal. Or at least the concept of getting a deal, whether it is
actually one or not. It’s not that you’re trying to fool the consumer; it’s just that there are certain mental obstacles every
shopper has that you have to get past.

When you’re pricing your items, you have to first make sure that you’re covering your cost of the item. You have to think about your overall costs to run the business and how much money you can make on the item. But you have to consider how the customer is going to react to your pricing as well.

Ask yourself the following questions when you are formulating your prices: What are my customers willing to pay? How high
can I go before I start losing my loyal customers? What discounts and sales will appeal the most to them?

Put yourself in the shoes of the consumer. Think about what price appeals to you the most and what turns you off a product.
Set your prices according to what the competition is charging as well. This will help you determine the optimum price you
can get for your products.

e-Wealth Daily

About e-Wealth Daily

The e-Wealth Daily Bulletin brings you daily tips, advice and breaking news related to home businesses, small businesses and internet marketing. Our team of experts gives you the information you need to take your business pursuits to the most profitable level. Founded by Adrian Newman in 2003, the e-Wealth Daily Bulletin and www.ewealthdaily.com are a division of Lombardi Publishing with online newsletters reaching over 100,000 subscribers each month.

* IMNewsWatch would like to thank e-Wealth Daily for granting permission to reprint this article.

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