(A seven minutes read)

One of the greatest challenges of every business is the proper pricing strategy. You fear to price the service too high or too low, to this end your business needs a pricing strategy that suits your target audience. The worth of your product or service, the value proposition of your competitors product or service, knowledge of economic trend of the general market, all these are vital in determining the effective pricing strategy.
Proper pricing may be a matter of life and death, and once your business gets it, it gets it. Every business must understand that in other to reach a suitable pricing strategy, the core and focus is the value offered in relation to the market. To reach an effective pricing strategy you must consider the following:

1. Think like a customer

There is a huge difference between the ways you view your product or service compared to the way a customer or client view it. To understand the customer’s view of your product, you must step into his shoes, think about what he values, the needs he is willing to pay for and how important is this value you are providing worth to him.
One Size fit all price
Not all customers will value your products or service alike, and not all of them value in the same perspective. To cater for this variation in value perspective, you may introduce different pricing level for your service or product.

2. Determine your Budget

Before concerning yourself with whether or not your customers can afford a particular price, you must first get your budget in order. Know the cost of everything, the cost of getting the work or service done for the client; learn exactly how many persons it takes to get it done, what you need to use or buy to get the work done; the expenses involved. All these will have to be considered in determining your pricing strategy.

3. Big Data

Data, customer’s data is a gold mine and it helps to analyse, amongst other things, the proper pricing strategy to employ. It helps, when analysed, to understand the customer’s psychology and a business may take advantage of it.

4. Competitors pricing strategy

It is good to keep an eye on the competitors pricing strategy, but you shouldn’t be obsessed with it, it shouldn’t control your pricing strategy, but may guide it, because it might make your pricing policy unnecessarily reactionary.

In determining your pricing strategy, you must be careful not to unnecessarily under-price your product, any amount you set as your price must be out of the value you render. Value over cost, it’s the value that makes the customer see beyond the price. Even when you under-price, it must be out of strategy, but care must be taken. Every pricing strategy might not be effective at first try, but a business must fashion out its own pricing strategy to maximise profit.