Pricing can be an imposing challenge. For the small business, the omnichannel nature of retail today makes this an even harder and increasingly competitive minefield.
Keep things consistent
Take a look in to the online marketplace and you’ll discover that many large ecommerce sites use complex dynamic pricing.
This takes into account different times of day and different customers and their behaviour. Prices are variable. In reality, bricks and mortar stores cannot do this.
Furthermore, for small businesses, you will need to have a consistent pricing strategy so that you offer customers a consistent experience. This is imperative for brand loyalty.
Therefore, feel confident that your pricing strategy can be consistent yet still work in your favour. The trick is to keep your eye on these retail behemoths and ensure you’re broadly staying within the same price range, without glaring anomalies.
This still makes a precarious playing field when it comes to setting prices. Small businesses need to use their very size and nature to their advantage. When it comes to what you can offer, you will have something unique; you just need to identify it.
Someone will always be cheaper
At this point, it is also worth considering that someone will always be cheaper. It can be a fool’s errand to engage in a pricing war. The reality is that lowering a price is easy as pie. Bringing it back up again is painful for all concerned. Price reductions directly affect profitability. If your customer is solely interested in the cheapest price, they probably aren’t the customer you want as a small business.
Keep your eye on inflation
Inflation can be a misleading factor when it comes to pricing and can require some savvy maths. In recent years, with inflation relatively low, it’s been mentally easy to absorb it in to prices. Small retailers, afraid to raise prices, think a few percent doesn’t make a difference.
However, cumulatively, inflation really does make a difference. Therefore, it needs to be reflected in your price changes at least annually.
Key points to your pricing strategy
Within the framework of the above, there are some tips and tricks that small retailers can use to define their pricing strategy.
Firstly, you need to identify what it is about you that your customers love. What is your X-factor? This builds brand loyalty and ensures that your customers are willing to pay the set price for goods from you. This means you need to clearly differentiate from the competition so that your customers are prepared to pay more precisely because of who you are.
This can be aided by investing in the relationship between you and your customers and exceptional customer service. Offer them value beyond the product, perhaps in terms of advice, a loyalty scheme, local assistance, or guides.
Also make sure you set your prices in a way that is sustainable. If a customer becomes a repeat customer, how are you going to keep them hooked whilst also being profitable? If your early pricing strategy is low, then this will pose a problem for the future.
Finally, realise that there’s never an end point where pricing is concerned. It always needs re-evaluating, and you’ll need to evolve your prices as your market and customers evolve too.
How do you go about pricing your products or services? Do you always take inflation into account? Please share your thoughts below.