Every 2 or 3 months, I set aside a couple of hours to analyze the competitive landscape for our online wedding linens store and to see what our competitors are up to. And in most cases, it’s business as usual. Sometimes a new competitor pops up and a new one goes under. Sometimes I find some new products that I feel that our store should carry. But for the most part, things are pretty calm.

Photo by the Justified Sinner

This past week however, I noticed that one of our old competitors completely revamped their website and started slashing prices on similar products. When I told my wife about this, she seemed very concerned. After all, how could our little online store possibly compete against a store with such low prices? Unless they were purchasing their products at a much lower cost (unlikely), …

Pricing your products effectively isn’t just about assigning a set of numbers to items that you sell. It’s also about managing perceptions. A common misconception is that customers shop primarily based on logical thinking. Especially with the advent of the internet and instant price comparisons, you might think that most purchasing decisions are made based on numbers and hard data.
But in fact, the average customer is not only illogical but malleable as well. Studies have shown that the perception of value presented to a customer can easily be massaged and enhanced with a variety of psychological techniques. Here are a few examples of some of the ways you can enhance a customer’s perception of value.
Make Your Customer Forget About The Percentages
Prices are rarely evaluated in absolute terms. Instead, most people evaluate discounts based on the percentage savings off the …

In a previous article entitled how to command premium prices for your small business, I emphasized the importance of coming up with a unique selling proposition for your products and services. A good USP grants you the ability to charge a premium for the products that you sell.

Once you’ve pinpointed the strengths of your company and can effectively convey that message to a customer, it’s now time to search for your pricing sweet spot. While there’s no magical formula or quick solution to finding the right price, the techniques outlined in the article below will allow you to eventually determine the optimal pricing for your products.

One thing to keep in mind is that pricing is highly dynamic and always changing. Finding the optimal price is not a one time affair. You need to constantly keep track of your market and adjust accordingly.
Know Your Customer And …

How much is a customer willing to pay for a product or service? You might think that the most obvious way to find out would be to simply ask the customer. After all, your customers dictate the market price right? Wrong! Turns out that basing your prices strictly on customer input is probably one of the worst ways to price your products and services.

I’ll use buying shoes as an example. If Kenneth Cole came up to me and asked me how much I would be willing to pay for his latest shoe design, I’d probably say $50 (I’m cheap when it comes to shoes). After all, at the very basic level, it’s just a pair of shoes right? But if the shoes were guaranteed to increase my height by 2 inches, I would probably be inclined to pay a little more.

The example above …

Whether you are freelancing or running an online business, your net profit is largely dependent on the prices you charge customers. Pricing is difficult to get right. If you set your prices too low, you won’t make any profit whereas if you set them too high, you’ll drive customers away. Because pricing is such an important topic for businesses, I’m going to devote several posts to exhaustively explore ways to help you find the pricing sweet spot within your niche. This particular post will help you detect whether you are setting your prices too low.

Especially when your business is just starting out, you won’t have many data points to work with and the lack of data will make setting prices especially hard. Because you may be forced to rely on guesswork or extrapolations from comparable products to determine price, chances are you’re not going to …