Some business owners may feel the need to charge more for their products in order to create revenue, or may decide to charge less to create buying opportunities and repeat customers.
However, according to reference library 4hb, it doesn't really matter how you price your store's items if the customer doesn't believe he or she is getting good value.
"People don't always buy based on the lowest price, but they do like to feel they're getting a good deal," the news source notes. "The perception of what is a 'reasonable price' is more important than what you want to charge for your product or service."
The key is creating value. Once you've effectively communicated the value message, customers may view virtually any price you choose (within reason) as a worthy offering for your product or service.
If the asking price doesn't seem right in relation to the perceived value, it may create questions. Price a less-valued item too high, and you'll scare off those whose pockets aren't as deep. Price a less-valued item too cheap, and the customer is likely to get suspicious of the quality of the product.
Focusing too much on price - such as if/when you should offer discounts, if the price should be in a bold font or when it should be introduced in an offer - creates price sensitivity among consumers. Once price is the primary consideration for your consumers, a competitor with lower prices may come along and steal your business.
One example of a company creating price sensitivity is JCPenney's recent announcement of its Fair and Square Pricing initiative.
The strategy, to go into effect on February 1, "will focus on everyday low prices rather than routinely deeply discounted sales, and provide a level of predictability for consumers on what they can expect to pay for merchandise," Digital Journal reports.
Components will include daily regular prices, as well as month-long values and "best prices." The former are sales on merchandise that consumers routinely buy, while the latter are specials offered on the first and third Fridays of every month.
"By setting our store monthly and maintaining our best prices for an entire month, we feel confident that customers will love shopping when it is convenient for them, rather than when it is expedient for us," said CEO Ron Johnson.
Will this strategy work? Depending on how customers value JCPenney's products, some might view the move as suspicious, while others will be glad to earn discounts.