What's your pricing strategy?

by WF- Enzo Administrator
13 replies
Textbook marketing tells us that there are five basic pricing strategies:
  • Cost-plus pricing
    This is simply calculating your costs, and adding a markup which would become the final price.
  • Competitive pricing
    This is setting your price based on the competition.
  • Value pricing
    This is setting your price based on what customers believe you're selling is worth.
  • Price skimming
    This is initially setting a high price, and lowers the price over time.
  • Penetration pricing
    This is initially setting a low price, and increases in the future.


What's your strategy? Did you initially set your price lower, only to increase as more people purchased? Or do you simply add a markup to your product cost? Chime in.
#pricing #strategy
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  • Profile picture of the author dave_hermansen
    It depends on the website.

    For websites selling brand name products, our approach is "Competitive Pricing".

    For websites selling non-band products or selling our own white label, branded products, we employ "Value Pricing" and then split test to see if our overall profit goes up or down with incremental pricing adjustments.
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  • It depends of the market, the bigger your market is and your audience too, the higher the price you can do. But it depends of your Unique Offer Proposal. Include Bonuses and Increase easily your price! This is the best strategy for me!
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  • We take a more approach is "competitive pricing"
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  • Profile picture of the author Jason Kanigan
    Originally Posted by WF- Enzo View Post

    Textbook marketing tells us that there are five basic pricing strategies:
    • Cost-plus pricing
      This is simply calculating your costs, and adding a markup which would become the final price.
    • Competitive pricing
      This is setting your price based on the competition.
    • Value pricing
      This is setting your price based on what customers believe you're selling is worth.
    • Price skimming
      This is initially setting a high price, and lowers the price over time.
    • Penetration pricing
      This is initially setting a low price, and increases in the future.


    What's your strategy? Did you initially set your price lower, only to increase as more people purchased? Or do you simply add a markup to your product cost? Chime in.
    It's a good topic to bring up, because I have a completely different approach to all of these. Took Cost Accounting and Finance in college, too. The problem with all of them is they're focused on the wrong thing.

    Especially for coaches, agency owners and the like...I've shared this method.

    For digital products you have a much lower cost of fulfillment, ie. what it costs you to deliver the thing. So in that case you may price low to enter the market. However, I don't recommend it. For subscription models, I've discussed it here.

    We've talked about topics like these often over the years. There's a ton of knowledge here on the forum.
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  • Profile picture of the author webbie
    That is a very good question and one that requires thought and math.

    When I started selling infoproducts online in 1996 I sold ebooks for $14.95, some a little higher like $19.95 but the 'sweet spot' for a new buyer was $14.95

    I was making money but not enough to live on. I need at least 150 sales a month to make just $2200 a month. That still wasn't enough to live on so I decided in 2000, to make a 'bold' move and charge $495 for one of my new products... the only reason being I needed the money!

    I say it was "bold" bc no one was really selling ebooks at those prices then. I wrote the ebook and added a few videos to it to 'bulk up' the package. To my surprise, I sold 13 in the first month of the offer, made $6,435 on that product and $3,800 on some lower prices products and it was the first month I made over $10k online.

    I guess what I learned, which I still follow today, is have a good 'product mix' at various prices. The higher prices products (those > $500 or $1000) act as 'slack adjusters' to make up for the lower priced ones.

    My current lowest price product is $25, my highest is $4995. They appeal to different buyers at different times, but without the higher priced products I doubt I would be able to meet my goals.
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  • Profile picture of the author Jordan Stark
    My pricing strategy starts with the cost to generate leads and sales. Other factors like operation overhead must be considered also. It is similar to cost-plus pricing.

    Here's what wrong with competitive pricing...

    - You don't know what your competitor's cost is to generate leads and sales.

    - You don't know your competitor's overhead.

    - Your competitor may not have the same business model or priorities.


    Here's what's wrong with Value Pricing...

    - People change their minds about things every day and will take something for nothing if you give it to them.

    Price Skimming works but you need an effective strategy to go along with it.

    Penetration Pricing sounds like a sale on X-rated movies but it works for trying to find a "sweet spot" price or for limiting sales in order to control scale.

    BOOM.

    That's my $2,000 (not 2 cents).
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  • Profile picture of the author jackanderson96
    Competitive pricing myself, although aiming for cost-plus could have worked out better.
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  • Profile picture of the author Nubian Content
    Competitive pricing tbh
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  • Profile picture of the author cheese1688
    It really depends on what I'm selling. If it's a big brand or well known brand, i'd try to sell it for as cheap as the competitors are.
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  • Profile picture of the author msulcs
    I ask more than my competitors because I feel like the service is worth it and it always is. I get amazing reviews from customers which justifies my price point and creates a snowball effect by having even more sales.
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    • Profile picture of the author cheese1688
      Originally Posted by msulcs View Post

      I ask more than my competitors because I feel like the service is worth it and it always is. I get amazing reviews from customers which justifies my price point and creates a snowball effect by having even more sales.
      I mean I guess if the service is amazing, customers should not have to worry about paying top dollar. Kind of like buying products from Apple, most people would rather go to Apple for their knowledge and customer service opposed to another retailer.
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  • Profile picture of the author smithmary01
    Here are the main ingredients of an SEO quote:
    • The size of your website. An e-commerce store with thousands of pages will generate significantly more work than a 10-page website.
    • Your goals. Some websites need some basic structural tasks performed on them while others have a results-driven goal that requires more resources to be poured into an SEO campaign.
    • Your industry. Some industries are more competitive than others, which makes their keywords more competitive, too.
    • The level of service. Some SEO pricing models are designed to work on a set-it-and-forget-it basis, where you have someone managing your campaign end-to-end for you. Other models work a la carte: you order a project that fits into your overall marketing plan.
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  • Profile picture of the author DURABLEOILCOM
    You have to start low when you are new to the game once you build a solid foundation of customers, traffic and positive reviews you can increase prices gradually.
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