“The moment you make a mistake in pricing, you're eating into your reputation or your profits.” - Katharine Paine
Pricing is what will get your prospects to invest in your, if you think this action being conducted as random will work, you might want to rethink your thoughts.
Pricing plays a huge role in the way a business conducts its selling activity. For instance, if you are under the conception that spending your revenue on fancy advertisements and increasing the prices of your solution will capture your prospect's attention, you are WRONG.
We live in 2020, where prospects today are well researched and have all the knowledge they need to understand what is trending or happening in the market. So when you decide your price chances are your prospects will only invest in it if it's worth it.
For instance, say if you have a solution that fits the need of your target audience and you have priced it according to the value it offers. When prospects realize that for such an amount they are receiving multiple benefits, they wouldn’t have a minor doubt to invest their money in your solution.
This is exactly what you need to work on your pricing intelligence strategies much better. Your pricing can be affected by so many reasons such as competitor's prices, market prices and much more but as a business, you need to always ensure that whatever pricing you set, it’s well researched and applied because, for your target audience, it’s always quality over quantity.
Understanding this process, we have curated a short guide listing the top 10 pricing intelligence strategies which matter and can shape the way you set your pricing figures.
Let’s dive straight in.
TOP 10 PRICING INTELLIGENCE STRATEGIES
COMPETITIVE PRICE MONITORING
This isn’t a new word for you.
Competitive price monitoring refers to having a close analysis of what prices your competitors have applied. For instance, if your competitors are selling their solution for a certain amount, you can analyze why they are doing that and understand the value they offer for example if they offer 4 benefits and price the solution a little bit higher, you can analyze and compare your solution such as if your solution offers 6 benefits you could sell it at a reasonable rate which wouldn’t be too less or too more for your prospects to ponder upon.
So when your prospects compare both they would have to go with your solution since you offer more benefits and the price for so much of them is reasonable.
COMPETITIVE PRICE ELASTICITY
What happens here is say if your solution and pricing are great and you are achieving success in the market and amongst your consumers, what happens is because the sales of your solution are getting better, your competitors play a role in adjusting their prices accordingly.
For instance say if you sell your solution for $120 each and are working well with the figure, your competitors could alter their prices and sell their solution for $90 each. This can garner your prospect's attention away from you and explore what your peers have to offer.
Avoid this from happening and ensure that you are always alerted by your competitor's actions such as this and also try setting a price for your solution that even if your competitors are altering theirs, it sounds either too cheap or too expensive from their end.
Dynamic pricing stresses more on the changes taking in the market. The market conditions keep changing for example today your prospects may be paying $100 for your solution but when the next market changes happen they could be either be paying double that amount or lesser than that.
Dynamic pricing refers to making changes and aspects into consideration when setting a price. For instance, you could set your prices higher when the demand for your solution would be high, you could alter your prices for your different types of prospects whom you engage with such as for new prospects you could charge a bit less but then for the existing leads you could increase the prices.
Sometimes the market conditions are such that you would have to change the prices accordingly, so ensure that all these factors are also considered when you set up your next pricing intelligence strategies.
Another pricing intelligence strategy that you need to take care of is what value that price holds for your brand in the market. Wouldn’t you like to set such a price for your solution in the market it reflects that your brand sells solution at a reasonable rate? This is exactly what pricing intelligence aims to deliver. Ensure that whatever pricing you are setting up, in the market you are able to analyze and receive a pricing insight on the performance of your solution.
When you set a particular price, it is important that you are being perceived as implementing a good strategy. For instance, if you are selling your solution for a lower rate you shouldn’t fall under the cheaper category in the market similarly when you quote your price a bit higher you need to not appear at the very expensive list. Ensure that the price you set brings you under the image of reasonable and worth its categories.
The main agenda for such a pricing intelligence strategy is to cater to the right audience with the right product at the right price and at the right time. Price Optimization depends on the predictions of analysis from prospect behaviour. For instance, say you sell two types of solutions, now the whole year, not all your solutions will be sold equally.
Maybe in the first half of the year, the first solution would have a higher demand and the second half would prefer your second solution. Having an understanding of this helps you to set a price and cater to your prospect's needs during that time. So when you know that your prospects will demand your second solution you tend to start selling them during that time period by pricing the right amount.
When you cater to prospects' needs and sell them a solution that is worth their time and money, conversion rates and sales numbers should be the least of your worries for your business.
Rules-based pricing is another unique pricing intelligence strategy. What happens here is you will be setting the prices according to some rules or formulas being applied. Martech.zone explains ‘’If competitor’s price drops to X, our price goes to Y, If a product is low on inventory, raise the price to Z.”
Depending on the scenario your prices should be set accordingly. For instance, when your competitors drop a price, you could increase your price by offering an extra benefit which would entice your prospect to be drawn towards what you have to offer. Similarly, when you know that if one of the supplies of your products is less, you increase the prices so that you can sell better.
Incorporating all of this is necessary as it is yet another pricing intelligence strategy to be considered.
SMART DYNAMIC PRICING
This pricing intelligence states that the demand for the solution determines the pricing. For instance, say if a product of yours is garnering more views on your social media handles or is getting better reviews, the price for that solution can be set accordingly. Even if you increase the price of such solutions, there is a valid justification with the reviews, feedbacks, and notes being considered of that solution.
As mentioned earlier, prospects ponder upon products who would offer better benefits in the solution being sold with a price that justifies what they are receiving. This pricing intelligence strategy is the perfect example of it.
Bundle pricing is another great example of pricing intelligence strategies. With bundle pricing, the concept is to sell a huge bulk of solutions to your prospects while giving them an idea that they will be investing in multiple solutions at a lower rate instead of having to invest in one solution.
This is a win-win category because such pricing intelligence strategies always work. Understand it in this manner, you are selling your solutions in a vast manner, while you manage to sell most of your solutions, your prospects, on the other hand, benefit from it because they are getting more with a cheaper rate.
Captive pricing is another great strategy for pricing intelligence strategy. What happens here is for your prospects to buy a solution, they need to buy an additional product for it to function. For instance, to access information online, you will need a good number of IP addresses that can help you but for that to happen you will need a proxy server.
This kind of pricing strategy always works because you can earn a good amount of profit since the prospects have to invest in two solutions.
This is a pricing intelligence strategy that matters when you decide on pricing. For instance, if you sell your solution for $99, $149 and such types of pricing figures, your prospects will find it cheaper and will be drawn towards buying it, but if you sell it for $100 or $150 your prospect could consider it to be too much and would walk away.
The main agenda here is to understand how the psychology of your prospects such as what makes them choose a solution, what prices draw them closer and much more. When you have the analysis of such information, it becomes easier to use this strategy.