The Importance of Price Selection
When I first started my online business and started listing my products, the most difficult part was setting the prices. I struggled with obtaining a high market share at a low price or the goal of raising profits in a secure market rather than focusing on market shares. In the end, I went with the latter, and although I did not get a high market share, with more stable sales than I would have thought, I was able to actively utilize the recognition of luxury brands. Although for the past few years, competitors have put up challenges with low-priced products, fortunately, thanks to the high-level of strategy and awareness I have built up over the past few years, it is safe to say that there have not been any large damages.
Setting the right prices for your products and services is a key element in marketing. Even if it is the same item, the sales results vary depending on what brand it is associated with, and prices as well greatly impacting the consumers that purchase products or services. Because prices fundamentally reflect the value of products and services, it is very important to establish and present the right price.
Recently, many companies have been concerned about price competitiveness. In the past, when supply met demand, production and sale happened on the spot, but today, where there is an over-abundance of supply, price competitiveness has become fiercer than ever for the number companies to survive their competition. Also, it is not easy to appeal to consumers who have become more prudent the benefits of products.
Although it does not always follow that something cheap will sell while an expensive thing will not, but recently many companies have been appealing to consumers with low prices as it is widely known that consumers prefer products and services at lower costs. Large companies like Wal-Mart and Costco do this by selling many products at low prices, and Amazon attracts consumers through the affordable pricing in the form of free shipping through Prime.
So how do you set the right price to compete with competitors that are price-competitive as well as have products of superior quality?
First, compete with a similar or slightly lower price to gain control of the price competition, then compete for additional sales from there. This is probably the safest route to deliver confidence to consumers about similar prices.
Second, maintain brand value by adhering to your current prices. Through this, you can raise your brand value and differentiate it, but you must prove to consumers that you are better than your competitors and that your high prices are worth it.
Finally, the riskiest option, maximize your price-competitiveness by cutting prices that may cause major losses to competitors. However, you must not forget you could be damaged to the point where you may not be able to recover the loss of proper market price and brand value.
This shows how the potential market effects of setting affordable prices is truly enormous. Because it can influence the rise and fall of businesses, it is something to be very cautious of. Therefore, it is very important to understand the consumer’s product habits in advance when starting a business and set your prices accordingly.
“Price is the money we pay, and value is what we get from it.”
The same types of products vary in level according to its quality and their prices vary depending on their value. However, the most important thing is that the consumers feel good about paying that amount. If you can satisfy consumers and set the price for what they believe the product is worth, it will not be difficult to target that field of the market.
Do not forget that ultimately providing products that meet the consumer’s needs and budget is a key element of marketing.