If you don’t already have one, you should consider creating a pricing policy. Without one, your profitability can become subject to inconsistent pricing, and you may even risk going out of business. A pricing policy helps you ensure that your company is making a profit, not just generating sales and revenue.
A formal pricing policy helps you grow your business when it is applied consistently. You do not want to have a complex list of prices that is different for each customer. That will result in lower revenue, reduced overall profitability, and can even cost you customers.
Some pricing strategies can grow your business more quickly than others. Here are three such pricing strategies:
Offer an Entry Product
Give prospects the opportunity to experience your product under limited conditions instead of asking them to go “all in” immediately. An entry product offers some value, but it’s not as expensive as the full product, which can be made available through an upgrade offer. Just be careful that you don’t discourage upgrades by offering an entry product that offers little value, or making it so valuable that they don’t have to upgrade. How does this look if you’re offering services, not a product? You might offer an audit without a written report, or provide a more focused review versus a complete diagnostic evaluation.
Create Exclusivity and Urgency
Creating exclusivity and urgency can make prospects feel more important to your company and encourage faster upgrades. No one wants to miss out on special features or preferential access. Exclusive and time-limited offers can be powerful motivators for prospects who are close to purchasing. In some cases, even prospects earlier in the buying cycle will move faster if the risk-reward matrix is favorable.
Bundle Products or Services
Everyone likes a bargain, right? But you need to make enough of a profit to reach your growth goals, and “bargain-basement” pricing can work against you, or even inadvertently signify inferior products and services. Bundling is a great way to increase your overall margins. It enables you to combine higher cost (i.e., lower margin) items with related ones for which your margin is greater while offering a price that won’t turn prospects away. In a services-based business, you might have less experienced employees do more of the work under the supervision of a more seasoned veteran.
Whether you use any of these strategies or others in your pricing policy, it is very important to the overall success of your company to set and hold to a policy. This is especially true when you want to empower your sales team to make deals and close more business. I’ve seen more than a few companies go under as a result of counting the number of customers or gross sales, instead of setting, and holding to, a solid pricing policy. Don’t let your company become one of them.