Small business pricing can be a major challenge and that’s why we’ve made your life easier with great pricing training. For the past week, we’ve been sharing timely insights from veteran small business owners all over the country.
Today’s recommendations come from Elliot Moskow, CEO of the Internet marketplace, Pricefalls.com. Elliot’s whole business is helping distributors sell their products online through effective pricing.
Based on his training and experience, here are Elliot’s top five tips on the best small business pricing techniques:
1. PRICE TAKING VS. PRICE MAKING: It’s key for small businesses to understand that sellers are ultimately “price takers,” not “price makers.” At the end of the day, the customers are the final decision makers with regards whether or not a product is worth purchasing at any given price.
Businesses must make educated decisions based on anticipated consumer demand. But don’t forget that the CONSUMERS are actually the ones who set the product prices.
2. “SHOP” THE COMPETITION: If other companies are offering similar products, it’s crucial to have information about their pricing. A good way to begin to look at your competition’s pricing is to run a quick search on “Google Shopping” for the products your company offers. If you want customers to buy your products (especially online), you must make sure your pricing is in line, if not better, than your competitors.
3. DISCOUNT WISELY: If you decide to lower your prices without understanding the possible repercussions, you may be faced with profit losses or even worse, a customer revolt when you elect to raise them again in the future.
Therefore, when making price cuts (especially substantial ones), it can be helpful to label products at “promotional pricing.” That way you can get a feel for consumer demand without being fearful of upsetting your buyer base if you decide there is a need to raise the price again.
4. TRY A DYNAMIC PRICING MODEL: Remember the first point that CONSUMERS really set the prices. This reality is obvious at Pricefalls, since many of the listings use Dutch (or Descending Price) auctions.
In this type of auction, product prices fall over a period of time until they reach a level that a customer is willing to pay. Utilizing this type of model allows businesses to look at the price decisions that shoppers make in order to come to an appropriate “fixed” price.
5. PRACTICE MAKES PERFECT: Rather than dwelling on past mistakes, scrutinize your experiences in an enthusiastic way until you develop a more lucrative approach. Efficient pricing takes trial and error and lots of dedication.
Thanks for these excellent insights, Elliot! If you’d like to contact Elliot or shop at Pricefalls, please see below:
Elliot Moskow
Chief Executive Officer/Chairman
Pricefalls, LLC
(866) 503-9799
You can find all these tips in one place: check out our top tips on small business pricing training — great info you don’t want to miss!
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