5 Pricing Strategies That Will Help You Attract Customers
Pricing is one of the most critical business decisions that companies must make. A lot of thought, calculations, and brainstorming go into the pricing decisions, so it’s no child’s play. If you think that pricing is a one-time process for a business, then its time to give that idea a second thought. With each passing […]
Pricing is one of the most critical business decisions that companies must make. A lot of thought, calculations, and brainstorming go into the pricing decisions, so it’s no child’s play. If you think that pricing is a one-time process for a business, then its time to give that idea a second thought. With each passing year, the market trends and customer demands keep changing. If companies fail to keep track of these changes and adapt their pricing strategies accordingly, the chances are that their overall profitability will go for a toss. Smart companies outperform their peers by quantifying, defending, and monetizing their value in the market and forcefully monitoring their actual pricing methods across customers, channels, and countries at regular intervals. We have identified some pricing trends that are expected to make it big in 2018. If improving pricing power, redefining commercial strategy, and providing inspiration for profit growth is what is on your mind for your business, then here are the pricing strategies to consider this year.
Top Five Pricing Strategies to Attract New Customers
This is a pricing method that was introduced and widely accepted in the travel and tourism industry. However, gradually, other companies in the business to consumer field have started to follow suit. Dynamic pricing can help exploit the willingness to pay and to introduce more sophisticated price differentiation models. For example, Uber for taxi rides uses pricing strategies based on the on supply and demand for cabs during a particular day.
Digitalization is leading to new business models and therefore new revenue and value-enhancing opportunities. The companies who can define the right pricing methods to extract willingness-to-pay efficiently are more likely to succeed in the future. One of the most substantial effects of digitization is the increasing price transparency. It leads to an increase in price elasticity, which makes the market more attractive for price-aggressive sellers to reduce prices. Consequently, it also makes it harder for premium sellers to maintain and increase prices successfully.
Often customers’ choice of a product is influenced by what is termed as behavioral pricing. Though behavioral pricing is not a new phenomenon, it is expected to be one of the top pricing strategies for 2018. Behavioral pricing methods have the ability to maximize willingness-to-pay by differentiating pricing based on customer value perception. Furthermore, they can also simplify portfolios and use price laddering to guide customers to more valuable products.
Customized pricing is one of the pricing strategies that companies can apply to capture customer value. Customized pricing has been used across various industries over the years – from airlines that up-sell a business class seat to customization of a brand new car. The main reason why customized pricing is gaining traction now is due to the rise of digital platforms. One of the critical success factors for conversion while communicating to a customer is the simplicity of your proposition. Traditionally, when the communication becomes too complex or tedious, the business will lose the customer. However, the rise of digital medium has changed that by making interactions more exciting and tailor-made for each customer.
This might be quite contrary to business rules as the common notion goes that business and emotions do not go hand in hand. But sympathetic pricing has proven to be one of the most successful pricing strategies for improving customer loyalty and brand reputation in the recent times. Sympathetic pricing methods involve offering discounts at the right moment when people need them the most. For example: when the transport system in London was disrupted, Uber offered discounts to customers that were suffering from the delays. They applied a sympathetic pricing strategy, trying to turn a negative experience for a customer into a positive one.