Strategic pricing is finding that sweet spot where you make a good profit, people want to buy, and everyone goes home happy.
The featured image above illustrates the premium pricing strategy at its finest. This pricing model only works if you know your customers won’t shy away from high prices, so instead, it helps your perceived value soar.
How do you charge higher prices?
Premium pricing provides a sense of luxury, exclusivity, and quality that works for brands that target affluent shoppers. You can’t just wake up one day and say, “Yup, I’m gonna charge 10X the price and offer the same value.”
But you can choose to offer more value at a higher price—even improving your customer experience can earn you greater demand and margins.
Higher prices boil down to strategic pricing—research, positioning, and value.
Tiffany & Co. Pricing Strategy Example
Other Guys: “Your price is too high.”
Tiffany & Co: *Scoff* “This ball of yarn is reimagined in handspun strands of textured sterling silver, rendering the ordinary extraordinary.”
Price Tag: $10,500 USD
Affluent Shopper: “OMG! I must have it.”
You’re probably thinking: How can they sell everyday objects for that price?
Granted, these “objects” are made of valuable silver, they’re not ordinary objects, but still: a ball of silver yarn for almost $11,000!!? Who does that!?
Tiffany & Co., that’s who, because they have positioned themselves to appeal to individuals with deep pockets; deep enough to buy an $11,000 ball of silver yarn or $550 sterling silver clothespin as a “whimsical addition to the home.”
Tiffany’s pricing strategy helps reinforce their ideal positioning.
Messaging is key to positioning yourself for your ideal buyer, but actions, not just words are required to charge the price you want to earn.
Your price should be informed by your ideal customer (i.e. target audience research), overhead costs, competitor pricing (everyone competing for the same piece of pie as you), and your strategic positioning in your niche.
Let’s break down the concept of strategic pricing with a quick analogy:
What is strategic pricing?
Imagine you have a lemonade stand, just like the one you might set up in your front yard. Now, let’s say you want to sell your lemonade for the perfect price to make the most money and make your customers really happy.
Strategic pricing is like figuring out the best price for your lemonade. It’s not too high so that nobody wants to buy it because it’s too expensive, and it’s not too low so that you don’t make enough money. It’s just right, like Goldilocks finding the perfect bowl of porridge!
To do this, you need to think about a few things:
- Cost: How much did it cost you to make that lemonade? You don’t want to sell it for less than it cost you to make it, right?
- Competition: Look around and see what other kids with lemonade stands are charging. You want your price to be competitive, which means it’s similar to what others are charging.
- People’s Feelings: Think about how much people are willing to pay for a tasty glass of lemonade. You want them to feel like they’re getting a good deal and that your lemonade is worth it.
So, strategic pricing is finding that sweet spot where you make a good profit, people want to buy your lemonade, and everyone goes home happy and refreshed. The perfect price is a win-win lemonade situation! 😊🍋
Successful Pricing Strategy Ideas
We’ll show you how to make those goals you wrote down in your diary at the start of the year a reality. It starts with finding your pricing sweet spot and then amplifying your sales with pricing strategies that boost conversions:
- Pricing Strategies to Sell More Event Tickets in 2023
- Pricing Strategies to Increase Your Activity Bookings in 2023
- Pricing Strategies to Increase Your Product Sales in 2023
Every business needs great pricing strategies to keep their profit margins high without reducing demand. When you have a solid process for how you price each of your products or services, you can captivate your customers and make them loyal to your brand with every new idea you launch.
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