The research has shown when you get something for free you assign less value to it than if you pay a high price.
Equally, if you buy something that has previously been priced highly and then is reduced in a sale you assign more value to it than something which at full price would have cost the same.
Both items in this case might be of the same quality and have cost the same to produce but the story we tell ourselves about initial price and perceived value is intrinsically within our psyche’s.
As a small business owner though you can use this to help you develop pricing strategies that increase the value customers perceive they get from your products.
Firstly, you should probably avoid offering your goods or services for free (especially when people offer to pay for it with exposure!).
Secondly, once you have undertaken an extensive marketing strategy exercise and know which target segments you are going after you should develop a pricing model in line with this.
If you are going after a low value, no frills segment then price at the top of the bracket within which they are most likely to pay.
If you are going after a high end luxury market then price at the top of their bracket (regardless of what it costs you to produce).
The most important thing you can remember when pricing is to detach the actual cost of production from your pricing and look at anchoring in the customers mind what the product is worth using all elements of your marketing – especially the amount of money you want them to pay!
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