Advanced technological tactics can help pricing strategies

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Advanced technological tactics can help pricing strategies
12/23/2011 9:24:59 AM
Category: Business Owner Tips

Choosing the correct pricing for your products or services is one of the most difficult decisions any new or seasoned business has to make. The pricing decision has become even more complex due to advances in technology that have opened the door for an array of new product pricing techniques. Some of these new technologies include radio frequency identification (RFID) chips, targeted advertisements, social media and automated pricing.

Despite the advances in technology, it's also important to lock down the basics of pricing your products or services, because not deploying the right pricing strategy can impact a business' ability to grow.

Factoidz points out that one of the most common mistakes business owners make is not pricing their items high enough. The fear of losing business can motivate a business owner to veer toward the low end, likely in hopes that better deals will drive new customers to the store.

However, there needs to be some connection between price and perceived value. For example, Starbucks thrives despite the fact that its prices for coffee are generally higher than their competitors. Is Starbucks' coffee inherently that much better than other offerings in the marketplace? That's an argument for a different time, but the fact is that many Starbucks customers believe they're receiving a superior product, and thus are willing to pay more to drink it. If a company's prices don't reflect the perceived value a consumer is expecting to pay for an item, they may become suspicious that something is wrong with the product.

On the flip side, pricing a product too high will inevitably lead to lowering prices, which customers may take as a sign that the business is not doing well. A ripple effect takes place and the company is forced to continuously lower their prices.

When developing a pricing strategy, it is important to invest some time in the process through methods such as surveys, focus groups and contests.

Once a solid blueprint has been decided on, owners may want to consider incorporating some advanced pricing technology. The Houston Chronicle explains that RFID chips can allow cashiers to access price and inventory information remotely. In addition, automated pricing systems can monitor competitors' price points and adjust prices based on sales or even expand a business marketing reach through social media and internet banner ads.

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