Pricing Strategy and Optimization

In the competitive and fast paced retail arena, pricing is one of the major elements that can make or mar a company. Getting the right price to suit not only the product, but the market and the season can be a grueling task. Thus, the need for a pricing strategy and optimization is highly significant in the world we find ourselves today. Customers always want a better deal; they, constantly are, bombarded with several options each day for the same product your company is manufacturing or selling. How do you sustain your customer and increase market share? All these questions and more will be answered in this article.

Pricing is one of the 7P’s of marketing in retail, it takes up a considerable amount of the retail process because of its delicate nature. It is one of the most difficult things for a retailer to do, adjusting price to get the right balance for your product and the customers. With pricing strategy and optimization, the retailer has better control of his products by fixing the apt price to stimulate sales. The strategy will also empower retailers to know how to fix prices across different categories and areas. Price optimization has removed the normal gut feeling of fixing prices but retailers can put prices on products based on relevant data. The data helps to analyze different variables to allow a retailer fix a price that will increase the sales and ensure growth of the business.

A good pricing strategy does not just mean adjustments in price but it goes way beyond that, it allows for the product to compete in the market. This is not competing with the lowest price but adjusting and fixing your price to just the right amount to boost sales. It is, therefore, important to tie your price to the value your products offer as well as considering the various changes and seasons of the market. Price optimization hinges on several factors, these factors rightly put in place, and can help improve retail pricing management and overall sales.

Interestingly, understanding the concept of price points and how to implement them is one of the factors that enhance retail pricing management. In retail, customers are major stakeholders in the market, satisfying them with what they want to hear and see will push traffic to your store. $50 and $49 are two different numbers in the minds of the customers, it makes a lot of difference to them when going to buy a product. As such retailers should be able to understand when and how to use price points effectively, some perceive round number to be honest while prices ending in 9 or (.99) can mean a whole different thing.

Understanding price points also comes with analyzing the location of the market, in America prices ending in .99 are considered to be normal but in some parts of Africa this is a different case. Other places have different pricing trends which the retailer has to study before implementing the prices.