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Product Pricing Strategies

by davecut85
9 replies
I'll be taking over some product management related items at my current job. I'm looking for some guidance on product pricing and any information on some simple resources regarding the subject.

What are some of the best strategies to pricing both an online and physical product? What if you have limited information/stats in making the decision?
#pricing #product #strategies
  • Profile picture of the author writeaway
    I can't say much about physical products and other types of online products.

    However, if you plan to sell information products, pay attention to the fact that there seems to be an 'industry standard' of pricing such products to end with a '7.'

    For example: $7, $17, $27, $37

    I don't know why this is the case but it appears to be the most common practice.

    Unleash the power of SEVEN

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    • Profile picture of the author Rooso
      If customers aren't coming to you already knowing what your price should be then it is your job to teach them if your price is a good one or not.

      If you have a product that you want to sell for 100 you need to present it next to other products so they can see what a great deal the $100 item is.

      For example, the $40 product just doesn't solve anyone's problem so it's a no-brainer that no one will pick that one. The $80 product next to it solves their problem and is what they came looking for. But right next to it, for only $20 more, is more than they expected.

      They have rationalized in their head that $80 is the right price because the common thing for $40 just won't cut it. Now you upsell them to the $100 product because it offers above what they expected and their logic makes the extra $20 invisible.

      You could even offer a fourth more expensive product for say...$145. This product does everything the $100 product does but adds a few things that they probably won't be needing anyway. Then they look back at the $100 product with satisfaction that it is the very best deal.

      You sold what you wanted to sell and made the customer comfortable with the price. Win win
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  • Profile picture of the author leilani
    This is my opinion only. For pricing products, service, online, I would research it out on the Information Super Highway.

    For physical products, I would take a look at Amazon. Do research there.

    For online products, I would do a Google search and see what is similar to your product. Find out what your competitors are doing.

    Just sharing.

    Leilani
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  • Profile picture of the author thereikid
    One way is create scarcity. Do this by offering the product at one price a limited time and double the price afterwards. This worked so good for me rather that shutting the cart completely.
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  • Profile picture of the author mirko76
    Have a look at this blog post by Nick Kolenda. Haven't seen anything better yet. He also has an AMA on the fastlane forum.
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  • Profile picture of the author nlanda
    You could also test different prices within a couple different campaigns. Who is your target market? Write down everything you know about them...once you get through that exercise, you will probably have a better idea what pricing will work best.

    Best Regards,
    Nancy
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  • Profile picture of the author quadagon
    Two books worth reading are psychology of price and priceless. Will give a good around understanding.
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  • Profile picture of the author RogozRazvan
    Get a book on economics.

    You price the product at the optimum point between demand and offer. Where you maximize your profit.

    And in order to determine an equilibrium point, you look at historic data for products in that category. It depends a lot on what product is but for fmcg and cg it is rather easy to discover.
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    • Profile picture of the author Steve B
      Excellent book (it's in its 5th edition) . . .

      The Strategy and Tactics of Pricing by Nagle, Hogan and Zale

      You can probably find an inexpensive used copy or previous edition at eBay or Amazon.

      Steve
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