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Tag: pricing strategies

Two Proven Marketing Pricing Strategies To Try

February 24, 2021 /

marketing pricing strategiesToday I am giving two proven marketing pricing strategies to try. A lot of people still do not understand how the law of supply and demand impacts their business, and how it can also affect your pricing strategies. So here are two proven pricing strategies to try based on when times are busy and times are slow.

When Demand is High

For example, if your business is crazy busy right now and you have more sales than you can handle, do not turn any business away (because these customers might never come back). Instead raise your prices, if only temporary, and especially if your supply or resources is limited.

Another good time to raise your prices is close to the last days of any major buying time for your business. For example, people who wait until the last minute to buy Christmas gifts or Mother’s Day gifts, will pay a premium for their procrastination, likely due to diminished supply.

Remember, people will spend more when supply is scarce and when the need is urgent. That is why toilet paper and hand sanitizer shot up in price during the initial stages of COVID-19. I am not saying to gouge people, that’s wrong, but a reasonable increase in price of 10 to 25%.

When Demand is Low

Now, what about when demand for your products is low? This happens when a product is nearing the end of its life cycle or the market is saturated with competitors. This is when you should have a sale, especially if your supply is high, and a significant sale to get rid of inventory so you are not stuck with it.

For example, winter fashions featuring a trend that might not be around next winter, are best to get rid of at deep discounts of 40 to 70% in February and March. Better to make some money then to get stuck with the inventory. Plus, these new customers might turn into return/repeat customers.

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© 2021 Gail Oliver. All rights reserved. Proven Marketing Pricing Strategies To Try.

When Pricing Products Too Low Can Actually Prevent the Sale

September 9, 2013 /

Pricing Products Too LowDid you realize that pricing products too low can actually prevent the sale?

Over and over again, the most common question I get asked is how to price a product, or should be lower their prices because no one is buying. But it is not that simple.

Pricing Mistake Made By This Small Business Owner

The other day I was reading how a small business owner was wondering if the price of her handmade dog leashes seemed reasonable. She was selling them for $7 and said that it takes  her one hour to make one leash. Right there, that sentence should have been enough to tell her “NO!”.  As I have stated many times on my blog, you have to factor in your hourly wage if you are producing your products, otherwise you are making no money.

If the dog leash takes her 1 hour to make, then she is essentially paying herself $7 an hour less material costs, less PayPal fees, less the fees of her online marketplace, less other business expenses. I’m guessing, but I would think that leaves her making around $4.50 an hour. This is not even minimum wage. So, in other words, her pricing is way off the mark.

She is under the assumption that her product has to be cheap in order to sell, but that is not why people buy.

If you ask someone why they bought a dog leash, they will typically answer:

  • It was durable
  • It was long lasting
  • It was the right length
  • It could be easily retracted

In fact, Google search shows people are looking for a “dog leash  that”:

  • Stops pulling
  • Doesn’t tangle
  • Floats
  • Won’t break
  • Can’t be chewed through

By pricing the leash so cheaply, she is actually hurting the prospect of sales because potential customers probably looked at the price and thought a $7 leash would not last long. If she simply changed the price to $20, which is in line with most competitive products anyway, and instead touted the problem solving benefits of the leash, she would not only sell more, but she would actually make money. What a concept!

FINAL WORD: People don’t buy things because they are cheap, they buy things because they solve a problem. You have to price your products to make a profit, otherwise why be in business?

About Me

Do you need your Brand Story written or an SEO-Optimized Blog Post or a Personalized Business Consultation? As a 20+ year marketing professional and small business consultant, all of my services are super affordable.small business seo

I have consulted for thousands of small businesses since 2012, and my advice has been featured in the NY Times, Success Magazine, Yahoo Business, American Express, Big Commerce, Business2Community to name a few – so this is professional advice you can trust!

My Publicity Pitch service has also gotten my clients featured in Real Simple Magazine, Apartment Therapy, House Beautiful, Vanity Fair, Houzz, Martha Stewart, Glamour Magazine, LONNY, DesignMilk, Emmaline Bride,– just to name a few.

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© 2013 Gail Oliver. All rights reserved. Pricing Products Too Low

The Benefits of Offering Discounts for Various Types of Customers

May 27, 2013 /

offering discounts to groupsOffering discounts to customers is one of the best ways to get volume orders, as well as repeat business. Here are what
some top online retailers offer, that maybe you can apply to your own business.

Group Discounts

C Wonder is an online store that sells women’s fashion, accessories and home decor. They have a Group Gifting Program, which means you can apply for special discounts (up to 20%) if you are shopping for the office, PTA or just a large number of people. It is a great way to get your products in front of a new audience because you have one buyer purchasing for many people.

Trade Discounts

Anthropologie has a House & Home Trade program whereby all qualified architects, interior designers and decorating professionals can apply for membership in this group to receive 15% off all regular and sale priced merchandise. West Elm, World Market and Restoration Hardware have similar programs. The trades typically expect discounts, and this ends up acting as both a referral and an endorsement.

Professional Discounts

Beauty companies such as Mac and Bobbi Brown Cosmetics also offers discounts to professional make-up artists, much in the same vein as the trade discounts above.

Student Discounts

Asos is a very popular UK clothing store, and they offer all students (with ID proof) 10% off all items. This offer is smart because they serve a younger demographic and, for this age group, even 10% can be a big deal. Plus, they will tell all their friends. Other stores offering student discounts include TopShop and Banana Republic.Offering Discounts to Customers

Teacher Discounts

J.Crew recognizes the hard work of teachers and offers them 15% off in their stores, as does The Limited and Ann Taylor. This is a philanthropic gesture as much as a business decision.

Ways You Can Offer Discounts

So what groups could you offer a discount to that would help increase repeat business, spread word of mouth and expand your market?

If you sell jewelry, offer discounts for bridal parties. If you sell wedding invitations, offer discounts to wedding planners, If you sell pet products, offer discounts to dog trainers and groomers. If you sell toys, offer discounts to registered daycare centers or grandparents. If you sell art, offer discounts to hotels and office buildings.

You can set minimum requirements on quantities, if that makes it more reasonable, but, at very least, even a small discount may be the reason someone chooses you over your competition.

About Me

Do you need your Brand Story written or an SEO-Optimized Blog Post or a Personalized Business Consultation? As a 20+ year marketing professional and small business consultant, all of my services are super affordable.small business seo

I have consulted for thousands of small businesses since 2012, and my advice has been featured in the NY Times, Success Magazine, Yahoo Business, American Express, Big Commerce, Business2Community to name a few – so this is professional advice you can trust!

My Publicity Pitch service has also gotten my clients featured in Real Simple Magazine, Apartment Therapy, House Beautiful, Vanity Fair, Houzz, Martha Stewart, Glamour Magazine, LONNY, DesignMilk, Emmaline Bride,– just to name a few.

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© 2013 Gail Oliver. All rights reserved. Offering Discounts to Customers

How to Factor Your Labor into Your Prices So You Actually Make Money

May 10, 2013 /

direct labor cost formulaDo you need to understand a Direct Labor Cost Formula?

Pricing is a critical component of marketing. So before you start envying the volume of unit or dollar sales another business is getting, you have to remember, selling a large quantity doesn’t always translate into large profits. It could be that someone is working really hard to make very little money.

The biggest mistake most online shops make is not truly taking into account the value of their labor. So before you set the price for your products, you have to understand your labor cost and what you want to pay yourself in terms of an hourly wage.

Direct Labor Cost Formula

Let’s say that you are a one-person operation and you are making iPhone covers. You decide you want to undercut everyone else in the market and charge $15 each.

Labor – If it takes you 20 minutes to produce one iPhone cover, that means you can make 3 in an hour. If you are selling each for $15, then you are essentially paying yourself $45 an hour (3 x $15). So that’s about $79,000 a year based on a 35-hour work week, and a 50-week year. But wait. This is not your true hourly wage.

Materials – Now you have to deduct your materials. Let’s say that a plain case is wholesale $1.80 each including tax. Then there is the printing charge, let’s say .40 each. You have to get it to the customer, so even if you charge for shipping, you still have packaging costs, let’s say .30 each. So the grand total for 3 iPhone cases is $7.50. These are fixed costs. In other words, no matter what price you charge, these costs stay the same.

Selling Fees – If you are selling on an online marketplace like Etsy, you now have to deduct your fees ($.95). So for the three iPhone cases that would be $2.85 total. These costs are variable, so they go down when your price goes down, and up when your price goes up.

Ok, so now your hourly wage is down to $34.65 per hour, which is $69,300 per year in theory, if you sell 24 iPhone cases a day, 5 days a week, 50 weeks a year.

Other Expenses – But what about other business expenses? Gas to drive to the printer and the post office, packaging costs, shipping materials, bank fees, business taxes, Internet use, advertising costs. You have to factor all of these costs in as well.

Now, obviously you do have to stay in line with your competition, so you can’t charge twice what they are for the exact same product, same materials, same delivery and so forth.

So, before you set your prices, start with your desired hourly wage and work backwards from there.

If you cannot come up with a pricing model that is also a viable business model, then it is not worth doing.

Can You Believe This Seller Didn’t Price for Her Labor

I’ll never forget the seller who was knitting dog leashes. She indicated that one dog leash would take her 2 hours to make and she wanted to sell the leashes for $10 each. I tried to tell her that this was a terrible business model but she just didn’t get it. So I tried to explain it another way.

I told her that if it takes 2 hours to knit one dog leash, then likely the MOST dog leashes she can make in one day is 4 (and that’s based on a 8-hour workday). If you can only make 4 leashes a day, then you can only sell 4 leashes a day because you cannot sell more than you can physically make.

Therefore, the MOST her business could ever make in one day is four leashes at $10 each = $40 gross (we still haven’t deducted any costs). Now, does it still seem like a good business idea?

Need Help with Your Business?

If you do not know how to market your business or are not making sales, ask me a question at attentiongetting@gmail.com or check out my Consulting Services and my Store.

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© 2013 Gail Oliver. All rights reserved. Direct Labor Cost Formula

Why People Buy: Is Price the Reason You’re Not Selling?

December 3, 2012 /

 

why people buyWhen people come to your site and don’t buy, what is the first thing you assume is wrong? I bet you think it’s your price. Maybe. The truth is you have to think about what makes people buy, and price is not always a factor.

Reasons People Do Not Buy

  1. They don’t need your product.
  2. They don’t need your product right now.
  3. They don’t see the value in your product.
  4. They are unsure that you will deliver what you are promising.
  5. Your price was too high compared to similar competitive offerings.

So if you really feel price is your problem, then here is a way to test it.

Don’t lower your price permanently but instead offer a one-day only special with a coupon code for 50% (or pick a percentage in which you will still earn a profit – don’t take a loss).  Make sure customers know it is TODAY ONLY. If even at 50% off they are still not buying, then you know it’s not your price.

Do you know that too low a price can hurt you as well? If someone really loves or wants an item, and you have created that must-have feeling in the customer, price usually isn’t an object (unless it is obvious that you are completely overcharging). Sometimes too low a price makes the customer feel the product is cheap and of poor quality. So trying to undercut everyone will not always work in your favor either.

Do you know what makes people walk away from an online sale more than price? Shipping charges. Especially if you live in one country and you are buying from another. There have been cases where the shipping ends up equaling the price of the product. So sometimes it is better to offer FREE SHIPPING and buffer the cost into your product price. When a customer commits to your price and then gets to the checkout and sees it has doubled due to shipping, this is not the same exchange anymore and they WILL change their mind.

FINAL WORD: So, offer a fair price based on what it costs you to make your product and allowing for a profit, compare it to your competitors’ prices, test it with your market, and then make sure your customers understand the value that comes with this price. Related: Two Easy Pricing Strategies to Try.

IF YOU ARE NOT MAKING SALES, I can help! My 12-Month Marketing Plans will give you all the tactics you need to successfully promote your small business.

© 2012 Gail Oliver. All rights reserved. Why People Buy. 

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