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It is no secret that pricing affects whether a consumer decides on purchasing the product you offer or decides to choose the competitor’s one.

By now, we can all agree that product success is a combination of concurred market trends, the quality of a product, your customer’s preferences and the difference with other product’s prices when generating sales.

That is why in this article we want to show you how setting prices that are too high or too low can influence the traffic your business gets so it is crucial you consider a strategy and tool to decide this pricing factor.

So pricing… where do I start?

Before getting to the correct and appropriate price for your product, retailers have many factors to consider. The one to start off with is definitely recognizing who your competitors are.

Once you do, you need to grasp what makes your service or product unique or different from the others, especially later on when you will have to deal with price monitoring.

Although there are savvy customers that do compare the prices of goods on other shops or stores, lowering your product price may not necessarily provide you with a market advantage.

What matters the most is how customers see your product. Competitors may lower their prices just to outdo yours.

So rather than offering a cheaper price, you need to build a connection with your customer and convince them that your product is far better and more valuable than the rest. So far so good, right?

Elements to Take into Consideration When Pricing

Well, so you know who you are competing against. Now the second essential element to look into is expenses.

So the difference between how much you charge and the product to pay is the markup, and in your final price you should take that into account as well as other selling expenses like the overhead costs.

Of course, these elements vary depending on the type of services or products you offer and sometimes you will also include the sales personnel’s salaries, account fees of the merchant, commissions and the website hosting if being sold online.

Another factor you need to consider is the demand of the consumers since low prices influence in building a higher demand.

Should I decide on a lower and cheaper pricing?

Low pricing may affect the traffic or sales volume, making it either go up, but also go down.

There are even retailers who intentionally price their products cheap to catch the customers’ attention, to then sell these same products or services at a higher price later on.

A big setback of putting the price of your product very low is that customers may question the quality of your product and choose the competitor’s (more expensive) product because they would rather go for quality than price.

Commonly, those who prefer quality are willing to invest in products they think are worth the price. Thus, low products would make them assume that your product or services have poorer quality or are not as good as other goods on the market.

Although you may earn more if you end up selling more products, the low priced products may not provide you with a greater profit, and that could mean that what you generate is not enough to cover costs (especially if the sales volume is not enough!).

The uniqueness of the product 

Although product uniqueness is not a guarantee of a higher profit, according to market research: it can build the interest of the consumer, but it is not a guarantee that it can get more traffic (if the customers don’t like it).

However, if a certain product is set at a high price, the consumers will still buy it if they like it and think it’s different.

Therefore a product must be right, since the price difference and price monitoring are crucial aspects.

Make sure you don’t price your product out of the market. You must thrive to provide high-quality products and or services that are able to compete against similar products in the industry and that won’t compromise the profit of your business.