What are the pricing strategies for commodities?

#PricingStrategy #PriceImpact

A high-quality pricing can not only greatly increase the conversion rate, but also allow customers to have a higher repurchase rate!

 

01 What is a pricing strategy

Pricing strategy, a very critical component of the marketing mix. Price is often an important factor in the success or failure of a deal, and it is also the most difficult factor in the marketing mix to determine. The goal of enterprise pricing is to promote sales and obtain profits. This requires companies to consider not only cost compensation, but also consumers' acceptance of prices, so that the pricing strategy has the characteristics of two-way decision-making between buyers and sellers. In addition, price is the most flexible factor in the marketing mix, which can respond sensitively to the market.

The three main pricing decision-making problems facing the sellers are: how to price the product for the first sale; how to set the price of a product with the transfer of time and space to meet the needs of various environments and opportunities; how to adjust the price And how to react to competitors' price adjustments!

 

02 Research the role of pricing

Some people think that the price is just a number, and having a price means having income. For sellers, taking advantage of consumers' irrational perceptions of price can be a powerful competitive tool.

Does research pricing do anything?

Some people think that the price is just a number, and having a price means having income. For merchants, taking advantage of consumers' irrational perception of prices can use prices as a powerful competitive tool. The pricing method is the same as the common X.99 yuan in life, and it is the merchants who are proficient in this way that determine the choice of consumers.

 

03 price factors

There are many established pricing strategies and methods in the traditional field. The basic ideas and Internet products can be shared, and the differences can be compared for reference!

The key difference of Internet products is that the cost and income structure of commodities are relatively complex, which is different from the "real commodity-earning cost difference" of physical commodities. The Internet can create a variety of cross-subsidy profit models without necessarily charging users. Overall pricing is less important than traditional commodities. In addition, the user is decisive to the price. The product value is affected by the user's psychological feelings, and the pricing is flexible. But on the other hand, the crowd is extremely sensitive to the price of Internet products!

1. Intrinsic factors

Factors affecting pricing can be divided into internal factors and external factors. For example: considering the target group and positioning, the market positioning of the product determines the price range, and whether to pursue profitability financially. If profit is not the goal, the price can be lower than the cost. Most Internet products do not aim to make profits but to encircle users, so there is no bottom line for prices.

2. External factors

Among the external factors, first consider the demand elasticity, demand elasticity = percentage change in quantity demanded/percentage change in price. The demand for most Internet products is highly elastic, and a large number of users will be lost when fees and prices increase.

The second is the market situation. The higher the development level of the industry, the smaller the price bonus enjoyed. Finally, there are environmental factors, such as the overall social and economic level, policy environment, and macro-level legal control measures. If products are to be sold through channels, profit margins need to be reserved for middlemen.

 

04 price factors

There are many established pricing strategies and methods in the traditional field. The basic ideas can be shared with Internet products, and the differences can be compared for reference.

The key difference of Internet products is that the cost and income structure of commodities are relatively complex, and different from the "physical commodity-earning cost difference" of physical commodities, the Internet can create various cross-subsidy profit models, which do not necessarily charge users. Overall pricing is less important than traditional commodities. In addition, the user is decisive to the price. The product value is affected by the user's psychological feelings, and the pricing is flexible. But on the other hand, the crowd is extremely sensitive to the prices of Internet products.

Internal factors

Factors affecting pricing can be divided into internal factors and external factors. For example, considering the target group and positioning, the market positioning of the product determines the price range. And whether to pursue profit financially. If profit is not the goal, the price can be lower than the cost. Most Internet products do not aim to make profits but to encircle users, so there is no bottom line for prices.

External factor

Among the external factors, first consider the demand elasticity, demand elasticity = percentage change in quantity demanded / percentage change in price. The demand for most Internet products is highly elastic, and a large number of users will be lost when fees and prices increase. The second is the market situation. The higher the development level of the industry, the smaller the price bonus enjoyed. Finally, there are environmental factors, the overall social and economic level, policy environment, and macro-legal control measures. If products are to be sold through channels, profit margins need to be reserved for middlemen.

 

Six Common Pricing Strategies

Discount pricing, psychological pricing, differential pricing, regional pricing, combined pricing, and new product pricing.

 

American Taxonomy

Competitive pricing, cost-plus pricing, skimming pricing, limit pricing, loss leader pricing, market-oriented pricing, penetration pricing, price discrimination pricing, etc.

 

05 consumer psychology

In addition to cost analysis, competitive product analysis, and customer group spending power analysis, we also need to master some necessary consumer psychology before setting prices.

The anchoring effect means that when people need to make a quantitative estimate of an event, they will use certain specific values as the starting value, and the starting value acts like an anchor to restrict the estimated value. As a result, when you make a decision, you will unconsciously pay too much attention to the information you initially obtained. It is just a cognitive bias that everyone has. Businesses can take advantage of it, and we can also use anchoring to create advantages. We ordinary people use the anchoring effect, and the best place to use it is at the negotiating table.

Especially when we need to negotiate prices when we sell products, some platforms have a bargaining function, and many friends can get customers instantly with a one-buy price, but I suggest that you start with the price more to increase the conversion rate!

Summary: Many people have a misunderstanding when negotiating, that is, the negotiation atmosphere is sometimes very tense, and both parties are unwilling to make an offer first, for fear that their strategies and weaknesses will be exposed if they speak first. However, the anchoring effect tells us that it is much better to strike first. Because the price quoted first will become the anchor point, and subsequent negotiations will always focus on this price. And the higher the price, the better, just be careful not to be too outrageous so as not to anger the other party.