Pricing your products appropriately is critical to optimizing lifetime value and attracting the right customers. I have a process that I want to share that has been extremely helpful for figuring out product pricing for OptiMind.
When we priced OptiMind, we let consumers tell us the perceived value in prices for optimal sales and revenue. The first thing that you need to do is determine the minimum selling price for your product. Now it’s time to look at comparable products currently on the market to get a baseline idea. If you want to get quantitative about it, you can map out the bell curve of market prices with standard deviations. Once you have the maximum and minimum prices, you’re going to choose five prices in that range. Use this flow to guide you through the pricing strategy for finding the best price for your product. Google Consumer Surveys is an excellent service that can be used for a variety of reasons whether naming or pricing a product. We gave everyone the same brief description of our product and then asked if they’d buy it for X amount. While looking at the survey, consider who your target buyer is and play with the sidebar that contains the demographic information. For example, if the product is likely to be purchased as a gift, the end consumer will not be making the purchase. At this point, you can calculate which of the best-surveyed price points will increase your profits the most. Here’s the spreadsheet file where you can input your own results to see the percentage change in terms of revenue.
If you want to optimize a product’s price, then you need to ask the people who will be buying it. The age-old tale that you can never raise your price, but you can always lower it is completely true. Google Consumer Survey – online survey allowing for market testing with specific demographic information ($50 for 500 people). March 22, 2012 by RBDenterprise 1 Comment Retail store marketing, are loss leaders a good pricing strategy? Loss leader pricing is a strategy used by retailers where they price and advertise an item at or well below cost in order to attract buyers into their store. Think about it this way, you see an ad for a Bluetooth headset you need at a store where you usually don’t shop, and the price is amazingly low.

Consumers are always looking for the lowest price products, but they also are so used to convenience, that store hopping to get the lowest price on everything they buy is inconvenient, or with the price of gas cost prohibitive. We recently discovered a better solution.  Not only is it better, but it’s also less expensive.
When I contacted the old vendor to cancel our service, guess what their immediate response was.
What?  So you’ve been overcharging me for years?  Or you magically just had a price reduction to the very dollar amount of my new vendor and you were about to call and tell me about it?
We’re still leaving but now, instead of feeling a little guilty about leaving our old vendor, I’m feeling a bit used.
Dropping your price just to keep a customer is never a good strategy.  It makes everyone feel a little cheap. What’s your recommendation as to how to handle things when a customer is overpaying because the cost of services have gone down over time? I think the strategy is you give up that incremental income to make a lot more money over time.
After you’ve told your client that you can match the competing offer, all built up trust is destroyed. After a few back and forth competing offers, a customer has no faith that anyone is honest any more. All you are left with is a customer who gets a gear deal, but knows that all along you we’re trying to extract a lot more from their wallet. Each survey said the exact same thing, but we changed the price to test consumer sensitivity.
Say you find you have an overstock or need to increase brand awareness and traffic and someone suggests using the loss leader pricing strategy, is this a technique you should consider for your retail store? This is done in the hopes of increasing traffic and that customers will purchase regular priced items at the same time. So you go and while you’re there, you realize you need ink for your printer and an SD card for your camera.
If your business depends on continued business, or the products you sell are not consumables that need to be replaced with regularity, consider using a loss leader – even if you take a loss on the first sale, establishing the relationship with the customer at the time of the first sale will bring them back and then you can make up the difference on future sales. Some product manufacturers will not allow you to use loss leader pricing, and in some states it’s illegal to sell below cost. If they’d valued our business – why didn’t they offer us this new price while we were still their customer?
I hate to give up the revenue but struggle with a way to keep the pricing relationship right with the customer.
Service is one of the forms of value added has had more success in the consumer economy, but in countries where purchasing power is low this strategy can have no effect because people want as cheaply as possible, trying to eliminate value added.

The idea is that the lower the first dollar number is, the less expensive it’s perceived by the consumer even though it’s only a penny difference.
Once you have 5 prices to test the market with, you can launch 5 different surveys and find out which price people will go for most often. With OptiMind, our product goes straight to the consumer, as opposed to being sold in retail stores, so we knew exactly what they were willing to pay based on the survey. That’s why it’s the foundation for this golden rule: When in doubt, go with the higher price. However, if you’re trolling without constructive criticism, then please kindly go to Reddit.
Just because a customer buys the product one time at a certain price, that doesn’t mean he or she will continue buying it at that price over a lifetime. The ink and SD card are at a price that is higher than you’d pay where you usually shop but you think “well I’m here already” or “with what I saved on the Bluetooth it’s worth it” and buy it there instead of waiting. The loss in profit on that item is made up for by the regular or higher price items they buy when in the store along with the discounted item. With OptiMind, we considered coffee in our pricing strategy, not just other nootropics and supplements.
Essentially, you want the number to reflect the thoughtfulness and built-in logic that went into choosing the number. Keep in mind who the actual buyer of your product will be and not just your targeted consumer.
If the percent increase in price is less than the percent decrease in demand, then you should raise the price. Also, when advertising, be sure to add “while supplies last” to avoid being held to the price past the advertisement or having to give rain checks. The same prime can be applied to dates where 1999 at first glance gives a more archaic vibe than 2000 does.
Yet, this is only true up to the point of profit maximization because, in the real world, expenses change based on quantity and scale.
If you’re just shooting from the hip, your price will fail your product and if you shoot low, it’s hard to justify price jumps to existing customers. When we priced OptiMind, we also combined specific pricing with a gut-bias theory on odd numbers.

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