Have you ever walked into a home decor store and found the perfect accessory for a bedroom? Then noticed that the price tag is 4 times what you thought it would be? I have. Just this past weekend I was shopping with my mom in my hometown at a place called Perennial Accents. I am currently looking for a little basket to put my boyfriend's parent's Christmas present in. My mom pointed one out and it was beautiful. However, it was over $50. I understand that somethings are worth more like Longaberger baskets which do have a higher price tag. But there was nothing special about this basket. It was pretty and had some decoration on the side of it, but I didn't think that it was worth the price tag. Plus, I had never heard of the company that made it. And I did't blame the store, however. I happen to know that this is a reasonably priced store that sells high quality products. I have bought many a Christmas present for my mom from. But I started thinking about how many times we look at something and don't feel that it's worth the price.
When it comes to pricing, we have to be sensitive. Not only do we need to know how much our product is worth, but we need to find out if our customer is willing to pay what we charge and if we're making a profit. One thing that always comes to mind for me is truffles, and I don't mean the mushrooms. A handmade chocolate truffle can bring in about $3 per truffle. I used to think that this was extravagant until I made truffles myself. There's a lot of work that goes into them. I understand now why they cost so much. Plus, they are delicious. But would I pay for a truffle if it was $5. Or would I think it was really cheap if it were only $0.50.
In research we use a technique called the Van Westendorp Pricing Sensitivity Meter. It is a few questions that ask about pricing. From the data, we are able to determine the optimum price. We also can determine what is considered too high that it isn't worth price and what is too low that makes customers question the quality. It's a really interesting technique. I'm not saying everyone needs to do marketing research to price every thing in their stores, but price does have to be a consideration. If you get a lot of people in your store and you know that you're selling a great product but you aren't selling much, it may have to do with your price. Sometimes you have to start lower and work your way up so that people recognize the value of the product that you are offering. There's a reason that Rolex and Mont Blanc can charge really high prices for their products while Seiko and Cross have more reasonably priced offerings. I guess you have to look at your pricing and determine if you're charging a Rolex price for a Seiko product.
Happy Marketing!!!
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