Your customers see a high price as a testament to your quality. This is valid for your agency as well, especially if your approach or skill level is different from your competitors.
#Pricing strategy based on competition how to#
Robert Cialdini, Author of Psychology of Persuasion, said that in “markets in which people are not completely sure of how to assess quality, they use price as a stand-in for quality.” Has direct impact on your company’s revenue You’ll try to figure out if there are any compromises you need to make when you purchase it. When you see a high-priced product, the following words might pop into your head: exclusivity, premium quality.Ī low-priced product, on the other hand, will make you skeptical of its value. Creates customer confidence in your product A high-priced product implies high quality and a lower-priced version of the same means lower quality. The price you choose influences the customer’s perception of your product. How do you want your product to be perceived, premium or low quality? If you manage to set the ideal price, it’ll immediately convince your prospects to sign up for your services. But they also won’t choose it if it’s low-priced, as they might consider it of inferior quality compared to available alternatives. Price is the primary influencer of purchasing decisions.Ĭonsumers won’t pay a penny more than what they believe your offering’s true value is. Entices the customer to make a buying decision Importance of a winning pricing strategyĪ well-developed pricing strategy provides your brand with a number of benefits. I’ll soon show you a formula for creating a pricing strategy that works for your business.įor now, let’s look at reasons why you should invest time and resources into developing a pricing strategy rather than giving your product’s price an arbitrary value. But like Patrick’s quote made clear, there are different variables to consider. Think of your pricing strategy as a two-lever mechanism: increase in demand results in an increased price and vice versa. If you want to be sure that you put the right price tag on your services or products, you need a proper strategy. This means you have to consider elements like how much your clients value your brand, how much they’re willing to pay you to solve their problem, and how much energy and resources were invested in the solution. Price is the exchange rate you put on all the tangible and intangible aspects of your business. After all, you know the magnitude of problems you solve for your customers.īut no, it’s not as straightforward as that.Īs Patrick Campbell, CEO of PriceIntelligently, describes it in this article: Going by that definition, you’d think it should be easy to calculate a price. Price is the amount of money you charge for your product or service. I’ll help you get comfortable with the pricing strategies and tactics needed to turn your agency into a profitable business. If, like Mash, you realize that you need a pricing strategy to turn around your business, this guide is for you. Instead, it should be guided by an agency pricing model that helps you maximize your profits and revenue. Mash understood that setting prices for your product or service shouldn’t be a shot in the dark. In his words, he wasn't able to build a successful business until he “understood the relationship between pricing and profits”. That was Mash’s reality-and it was one that almost drove SpellBrand into bankruptcy.
Can you imagine repeatedly spending $400 worth of resources on a project you priced at $250? The globalization, in return, produced a pricing problem: designers from countries with lower cost of living (COL) started competing with those in high COL countries. This resulted in a snowball growth of individual designers who commoditized graphic design services around the world.
The world was rocked by an online revolution which continuously introduced new online graphic agencies. In 2003, Mash Bonigala’s agency, SpellBrand, was in dire straits. The choice of the pricing strategy depends on a variety of factors, including the target market, competition, and the product or service being offered.Businesses can use different pricing strategies, such as cost-plus pricing, value-based pricing, and dynamic pricing, to achieve their objectives.A pricing strategy is the method that a business uses to set and adjust the prices of its products or services to increase revenue and market share.
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