It can be nearly impossible to simply slap the perfect price on an item that you put your blood, sweat, and tears into. However, the price you choose can make a profound impact on how your product is received by retailers and consumers alike. You want the price to add value to your brand, but you don’t want to scare retailers away from purchasing your products.
Prices are incredibly important, but they’re far from concrete. Just as retailers can keep their prices flexible to accommodate changes in demand, you too can change your prices. You can use this ability to your advantage as your product matures, and use it to protect your brand.
Different strategies are going to warrant different prices, and prices will vary between different product verticals. However, the strategies at their foundation are the same for all kinds of products, and can be successful in various industries. Here are a few ways you can make sure your brand is protected through your pricing:
Market Penetration Pricing
Market penetration pricing is a strategy in which a manufacturer introduces an item at a price that is relatively lower than competitors. That way you can draw eyes onto your brand as you’re introducing it. It’s useful for brands looking to establish a presence with high sales volume. Once you reach your desired sales volume, you can slowly increase your item’s price over time to make up for any margins you may have lost when introducing it.
Market Skimming Pricing
Market skimming pricing is kind of the opposite of market penetration. When a brand is involved with market skimming, they price their products at the highest initial price that consumers will pay. From there, they will slowly start marking down their products over time to attract shoppers that aren’t willing to pay top dollar.
This strategy can be useful for a brand that is looking to establish a luxurious brand image. It will also work well in a vertical that generally charges high prices as well, that way you won’t stick out like a sore thumb. And if you wish to attract more price-conscious consumers, you can lower your price over time. However, if you wish to stay at the top of your price range, there are ways to make sure you maintain this brand identity.
Minimum advertised price (MAP) policies establish a price floor to keep your price from dropping at the hands of a retailer. That way you can still keep an eye on your resellers’ pricing processes and keep your prices within your desired range. Price is a huge influence on purchase decision, and since retailers are trying harder and harder every day to stay competitive, they drop prices. This can hurt your brand, especially if you want your price to help influence your value.
Unfortunately, retailers violate MAP policies pretty frequently. Luckily, there are ways you can monitor your prices to make sure your MAP is upheld. Price monitoring software can help you keep an eye on your entire reseller network. Automated monitoring can send you alerts as soon as your MAP is violated, and from there you can take action to make sure they don’t violate again.
Contributing Writer: Brian Smyth