When it comes to pricing strategies, the ‘how’ is Paramount knowledge to acquire. So many people know when and when not to price, but very few people know how to price, and this is the core of every business dealings. Most businesses thrive nowadays because owners have a vast knowledge about how to go about pricing. Everyone who sells at a retail level got their products from somewhere, and if they did not know how to go about pricing, they would have spent quite a fortune on their goods. Another word for pricing is bargaining, which is a way of beating down the price of a product or service to the lowest term or affordable term. Not only do business owners have different strategies for pricing goods in a business environment, consumers who also visit the market environment bargain on the products they want to buy. There are various pricing strategies known to man in the business world, but there are five common ones that people make use of every day in the marketplace or business environment.
Psychological Pricing Strategy
This is known as a strategy that involves a seller appealing to the emotional rather than the logical part or senses of the consumer or buyer. This means that, instead of being factual about the product and how it came about, the seller would encourage the buyer to get the product, using emotional tactics. Here, the buyer will have no choice but to go with the sale of the goods because he or she has been convinced emotionally. Psychological pricing strategies work in different ways, and people ought to understand that some things should be said and those that shouldn’t stop when using this type of approach. Remember, all the person needs to feel at that moment is an emotional attachment to the item, service or product.
Bundle/Whole Pricing Strategy
This is a situation whereby a seller wants to get rid of older goods in his or her possession thereby giving it out in large quantities for a little amount. Sometimes, when things are no longer in high demand from the market, sellers tend to lose a lot of profit, so in order not to lose out completely, they adopt this strategy. This is when you see consumers going home with large sums of products and boasting about how cheap they got it.
This is a process whereby a seller hikes the price of a good to an unreasonable level so that the buyer can beat down the cost to the original amount he or she wanted to sell it. This is an effective way of making a profit and working around pricing in the market places, and most sellers of guilty of this.
Market Penetration Strategy
This is a situation where you a seller reduces drastically the amount of his or her goods to gain the trust of customers or consumers for an extended period. After this is done, there will be an attained level of trust between both parties and the consumers will have no problem coming back for more even when the prices level up.
Premium Pricing Strategy
This is a situation whereby business owners place the price tags of their goods or products high than that of the competing partners. This is usually done when such businesses know that they sell good quality goods.