What is the pricing strategy? 7 steps to building an accurate pricing strategy

In business, determining the right price for a product or service is a key factor in achieving sustainable success. pricing strategy affects revenue, has a profound impact on customer perception of product value and quality. Together with Vindoo learn more about the product pricing strategy in the following article!

What is the pricing strategy? 

Pricing strategy is a method businesses use to maximize profits and revenue growth through determining appropriate prices for goods and services. This method includes many models and approaches to establish the optimal price for each product or service.

Why is it necessary to have a pricing strategy?

Whether you are just starting a business or are already a pricing expert, the strategies and techniques presented in this article will assist you in optimizing the pricing of your products or services.

Pricing strategy products need to consider many different business aspects such as revenue goals, marketing strategies, brand positioning and product attributes. These factors are all influenced by external factors such as consumer demand, competitor prices, economic trends and the general market.

Determine the correct pricing strategy in 7 steps

Pricing strategy for business: 

• Step 1. Determine the value of the product/service: Product value is determined through the basic unit of the product or service you provide. For example, if you sell shoes, the value is calculated per pair of shoes. If it is a monthly subscription service, the value is determined based on the services and features the customer can use in a month.
• Step 2. Assess pricing potential: Pricing potential is determined by the price you can set for the product or service. To evaluate this potential, you need to consider factors such as operating costs, customer demand, and competing products in the market.
• Step 3. Review feedback from customers: You need to determine the price they are willing to pay and see if the price change will affect sales.
• Step 4. Determine price range: Price range is the price within the range that both customers and sellers feel is reasonable. To determine your price range, you need to answer the questions: What is the minimum profitable price after accounting for production, marketing, and overhead costs? What is the maximum price you can set without losing customers?
• Step 5. Research your competitors' prices: List competing products and their prices, then decide whether you want to set a lower price to attract customers or emphasize the product's superior value to attract customers. set a higher price.
• Step 6. Consider the industry: Each industry has its own pricing strategy different popularity. For example, in the SaaS industry, "freemium" strategies with different price points are common. In the restaurant industry, high-end brands often use it pricing strategy high to create quality images.
• Step 7. Consider your brand: Your brand and business model also come into play pricing strategy. A brand that focuses on affordable prices can be chosen pricing strategy economically, while a brand with an innovative product can succeed with a "skim pricing" pricing strategy. 
• Step 8. Collect feedback from customers: You can survey current and potential customers with questions like: "What do you think is the right price for this product?" or "How much are you willing to pay for this product?"
• Step 9. Price testing: You can A/B test by introducing products at two different prices to two groups of customers to see which price is more popular. These results, combined with customer feedback, will provide you with the information to launch a successful product and minimize risk during market testing.

10 most popular pricing strategies

The pricing strategy most popular:

• Pricing strategy skimming: Applying a high price to a new product, then reducing the price when competition begins to appear in the market. For example: Innovative electronic devices are initially priced high to attract early consumers and then reduce prices to expand the customer base.
• Competitive pricing strategy: Pricing based on competitors' prices instead of just target profits, often with lower prices than competitors. For example: Real estate companies can adjust prices in line with or lower than their competitors to gain market share. 
• Dynamic pricing strategy: Adjust prices according to the market and customer needs. For example, ride-sharing services often increase prices during peak hours to reflect increased demand. 
• Pricing strategy Value-based: Pricing is based on the customer's perceived value of the product. For example: A famous coffee brand with customer loyalty can charge higher prices than its competitors.
• Penetration strategy: Set low prices when first entering the market and gradually increase over time. For example: Audio streaming services often start low to attract users, then increase the price. 
• Economic pricing strategy: Setting low prices due to low production and advertising costs, in order to generate high sales volume. For example: Low-cost airlines offer tickets at low prices to attract passengers. 
• Premium pricing strategy: Set prices intentionally high to create quality and brand awareness. For example: Designer eyeglasses are priced much higher than other brands to show class. 
• Cost-plus pricing strategy: Adding a percentage to production costs to determine the selling price, which reflects consumer demand and competitor prices. For example: Fashion brands often sell products for double or triple the production cost. 
• Pricing strategy Freemium: Offers a free version of the product accompanied by paid versions with more features. For example: Online software and storage services often have basic free versions and premium versions with many features.
• Pricing strategy by project: Pricing for each specific project instead of a fixed price for all customers. For example: Event organizers often quote prices based on the specifics of each event.

Optimize the pricing process and pricing policy with Viindoo Sales software

One of the sales software that supports automatic pricing strategy optimization is Viindoo Sales. With the multiple price list feature, Viindoo Sales allows businesses to sell products at different prices, depending on customer segments and target markets. The system automatically calculates prices according to available formulas, helping businesses plan pricing strategies from detail to overall, suitable for each time period and sales season.

Businesses can also take better care of VIP customers and large partners with their own pricing policy, automatically applied when creating orders, ensuring competitiveness and optimizing profits.

Overall, each pricing strategy each has its own advantages and challenges. Hopefully through this article, you have had a more comprehensive and in-depth overview of pricing strategies. Contact now Vindoo for detailed advice on quick and accurate product pricing solutions!