“Developing pricing is a never-ending exercise.” 

5 Key Best Practices and Principles to Follow

• Be Different. Establish a different price point from your competition, even if it’s only slightly different. Research says identical pricing tends to discourage sales.
• Keep it Simple. Research published in the Journal of Consumer Psychology found that prices with more syllables look and sound higher to consumers. For example, $1,500.00 looks more expensive than $1,500, and $1,500 looks more expensive than $1500.
• Focus on Perception. Consumers make pricing decisions based on the perception of how gain outweighs pain. An $84 monthly subscription sounds less painful than a $1,000 annual subscription, even though they come out to about the same amount over the course of a year. Similarly, the context of an offer can affect price perception. People will pay more for a multimedia course than an article even if the content is the same.
• Don’t Emphasize Bargains. While this may work for some brands with superior logistics capabilities like Amazon or Walmart, for most companies, it will create a perception of lower value, along with diminishing return on investment.
• Use Price Anchoring. The first piece of pricing information consumers see affects or “anchors” their perception of subsequent items. This means that contrasting a premium product with other products can help enhance its perceived value.

No single strategy is appropriate for all situations. Selecting a pricing strategy that fits your business requires knowing your company’s target market, accurate market data analysis, knowing your production costs, capability logistics and understanding your capital.