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10 Pricing Models & Strategies For Your New Business Idea

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http://bit.ly/pricing-strategy-2017
How you price your product, service or event can have a massive impact on your sales. Unfortunately, it can also lead to a massive anxiety attack as well.

In this free guide, we lay out 12 pricing models (and 7 pricing strategies) that you should consider in 2017.

More importantly, however, we share off the cuff, brutally honest strategies and new ideas about how to price your offering.

Other topics include:

-12 pricing models for you to choose from
-3 methods to price your first product or service
-What should be on your product or sales page to help customers feel comfortable with your price
-"Pre-launching" to test the price of your digital products
-Why we threw our pricing strategy out months after launching Unfunnel
-10 pricing strategies to increase revenue

Whether it's your first time putting something up for sale, or you're an old pro, the tactics in this conversation are going to help you get confident about your pricing. Enjoy!

http://bit.ly/pricing-strategy-2017

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  • Great info! Coming up with a smart, competition-based pricing strategy is one of the fundamental steps you should take to stay at least in the game in 2017. 60% of customers name price as the single biggest reason they shop where they do. Have you got an idea of how competitively priced you are on key items today? Recently I found a super fresh list of the most populat Price Monitoring Tools in 2017 https://mavitech.com/ecommerce-price-monitoring-toolkit/ and I’ll be glad if it helps somebody.
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10 Pricing Models & Strategies For Your New Business Idea

  1. 1. The Ultimate Guide To Pricing Strategy 12 Pricing Models And Strategies For Your Next Product Or Business Idea. made with
  2. 2. “Pricing strategy can lead to massive revenue (and massive anxiety). Here’s how to do it right!” How you price your product, service or event can have amassive impact on your sales. Unfortunately, it can also lead to a massive anxiety attack as well. In this guide, we lay out 12 pricing models (and 7 pricing strategies) that you should consider in 2017. More importantly, however, we share off the cuff, brutally honest strategies and new ideas about how to price your offering. 10 Pricing Models And Strategies For Your Next Product Or Business Idea
  3. 3. Other topics include: 12 pricing models for you to choose from 3 methods to price your first product or service What should be on your product or sales page to help customers feel comfortable with your price "Pre-launching" to test the price of your digital products Why we threw our pricing strategy out months after launching Unfunnel 10 pricing strategies to increase revenue Whether it's your first time putting something up for sale, or you're an old pro, the tactics in this conversation are going to help you get confident about your pricing. Enjoy! 12 Pricing Models For 2017 (and beyond) Most entrepreneurs never think too much about their pricing strategy. They might take a peek at a similar product from a competitor, adjust the price by a couple dollars, and joila – the product is ready for sale. But in the ancient business world, pricing was an art form. Pricing gurus at major companies obsessed over finding the perfect price to maximize profit from a given product or service. In other words, that Gillette razor is priced the way it is for a reason. Not because it makes the most sense for the consumer, but because it maximizes shareholder value. So, keep in mind that a pricing conversation is really about how you will get the most value from the product or service you decide to sell. Thankfully, independent business owners don’t have shareholders, so we can also take into account things like doing what’s right for the customer. And while Price Elasticity is great in theory, but it doesn’t tell us anything about where to start with your pricing strategy.
  4. 4. Instead, let’s talk about some of the most common pricing models: Cost-Based Pricing – An effective way to build a profit margin directly into the price of your product or service. It’s just what it sounds like - calculate the cost to deliver a product or service (cost), then add a ten percent margin, for example (plus). Cost-based pricing is straightforward for the entrepreneur, but doesn’t take into account the mindset of the customer. You may also leave money on the table by focusing on cost. Competitive Pricing – Competitive pricing focuses neither on costs or customers. Instead, it's all about the existing market for your product or service. In competitive pricing, your job is to research the pricing models and strategies of competitors to establish a price point. The range should have a high and low end, and the price of your product or service offering should fall somewhere between those two bookends so it's competitive. Luxury Pricing – Luxury pricing is a classic strategy used by brands like Mercedes and Rolex. The price has more to do with aspirations and image of the buyer than anything else. Buying your product or service at a luxury price, they are buying their way into a specific "club" or "tribe" - a representation of how we want the world to see us. Rate-Based Pricing – Also known as the hourly pricing model. Freelancers, consultants and coaches most commonly use rate-based pricing for services. The downside is you trade time for money. The upside is you’re guaranteed to get paid for each hour of work. Clients sometimes hesitate with hourly pricing because they fear the incentive is to work more hours to make more money as opposed to efficiency. Project-Based Pricing – A flat fee arrangement agreed to at the launch of a project. The seller often makes an estimate of how many hours she thinks the project will take and then price accordingly. Or, she may combine this model with some of the upcoming pricing strategies to charge more. The incentive is to finish the work quickly and with high quality. For this to work, the scope of work should be well defined upfront. Value-Based Pricing – This model takes into account two key questions: 1) Can the customer pay? and 2) Will the customer pay? They are the
  5. 5. customers, which makes value-based pricing a customer-centered approach to pricing strategy. The motivating factor in this pricing model is how much your customers are willing to pay, rather than how much a product or service costs to produce or deliver. There's a huge upside for the seller when value-based pricing is used well. Tiered Pricing – This model gives your customer the option of choosing between different versions of the same product or service. For example, imagine considering a landing page software for $25 a month, Leadpages with texting to prospects and webinar linking for only $49 a month, and advanced lead generation toolkit for marketing teams and agencies priced at $199 a month. A tiered pricing model turns a yes or no decision into an either or decision for the potential customer. It also provides a price anchor (as a consumer, I can convince myself I'm being frugal by spending $25 on the cheapest plan as compared to $199 on the all-in-one solution). Pay What You Want Pricing – Also known as a donation-based pricing strategy, pay what you want pricing allows the customer to make the decision on how much the product or service is worth to her. Pay what you want allows you to test market demand without knowing the price elasticity for your thing. When combined with a “suggested price,” the pay what you want pricing model can sometimes lead to more profit than a set price. Free Product With Paid Services – This pricing model is common for open source software, such as Red Hat linux, where the product is available for free download, but customers pay subscription fees if they want support. Other companies can also charge for installation, maintenance, training, customization, and consulting services. This pricing model is essentially a service business that uses free software as a marketing tool. Note that most investors aren’t interested in service businesses; fortunately, service businesses are good at generating cash flow on their own. The “Freemium” model – Many software companies like LinkedIn and Dropbox offer a free, limited-functionality version of their product, hoping that some users will pay a premium for advanced features. The trick with this model is to offer just enough value in the free version so you attract (and hopefully lock in) regular users, and incrementally more
  6. 6. value in the premium version so that you entice conversion and maximize cash flow. Your pricing must be a function of the incremental perceived value you offer: Can you convert 1,000 users at $100 per year? Or 10,000 users at $10 per year? Portfolio pricing – If you offer a suite of products and services, each with a different cost and value to the customer, then you have an opportunity to offer a customized solution that maximizes the benefit to the customer at maximum profit to you. This strategy can become very complex very fast. Time-Based pricing – A flexible pricing model made possible by advances in information technology, and employed mostly by Internet- based companies. By responding to market change or data gathered from customers – ranging from location to what they buy to how much they've spent on past purchases – dynamic pricing allows online businesses to adjust the prices of identical products or services to correspond to a customer's willingness to pay. The aviation industry is often cited as a dynamic pricing success story. In fact, it employs the technique so artfully that most of the passengers on any given airplane have paid different ticket prices for the same flight. As you read through these pricing models, you might have noticed something… these strategies do not seem to be mutually exclusive. And, in fact, they are not. Many of the pricing strategies can be used together to create the best outcome for your business and your customers. 273 Red Hot Ideas ForYour Next Best Selling Info Product in 2017
  7. 7. 7 Pricing Models For Digital Products As an online business, you have an arsenal of pricing options available to you. In today's post, we get into the specifics of how to apply them to your digital product idea in 2017. For digital products, pricing strategies range widely. From 99 cent ebooks and books on Amazon to online courses for as much as $2K or more, digital products truly run the gamut. Your price should be a reflection of your industry, your customers, and the value provided through your product or service. 1. Competitive Pricing 2. Value-based Pricing 3. Tiered Pricing 4. Pay What You Want Pricing 5. Freemium 6. Free Plus Services 7. Portfolio Pricing 6 Pricing Models For Physical Products Unlike digital products, there are hard costs (other than time and energy) to producing a physical good. While services like drop shipping, print-on-demand and 3D printing are helping drive costs down, the physical product world is still very unique. It’s important to keep in mind unit economics when it comes to pricing physical products: if you lose money selling one product, you’ll lose more money with every successive sale. 1. Cost-Based Pricing 2. Competitive Pricing 3. Luxury Pricing 4. Value-Based Pricing 5. Tiered Pricing 6. Free Product With Paid Services
  8. 8. 6 Pricing Models For Business Services Pricing services can be challenging, as so much of the value comes from your personal ability to deliver. Customers like to see things like testimonials, your portfolio, and case studies of your work before they’re even willing to consider hiring you. While price is important, make sure you don’t disqualify yourself by keeping necessary information from your customers. Additionally, “product-izing” your services can be a great way to help customers understand exactly what you can do for them. 1. Rate-Based Pricing 2. Project-Based Pricing 3. Value-Based Pricing 4. Tiered Pricing 5. Portfolio Pricing 6. Time-Based Pricing 7. Free Product With Paid Services 4 Pricing Models For Event Marketing Like services, special events are highly dependent on the speakers or workshop leaders to deliver value. The experience of the attendee can vary greatly from session to session. Setting clear expectations up front helps frame the value of the event so that a potential attendee is ready to consider the price you’ve set for the ticket. 1. Competitive Pricing 2. Value-Based Pricing 3. Tiered Pricing 4. Pay What You Want Pricing
  9. 9. 8 Pricing Strategies That Can 10x Your Revenue Pricing strategy can be challenging, complex, and offers no shortcuts. This reality makes “winging it” an enticing option when you don't know where to begin. But that’s the wrong move to make; smart pricing is deliberate. While intuition plays a role and you’ll learn more from getting your hands dirty than from arm-chair analysis, it can be helpful to review findings on pricing that have stood the test of time. Like "pricing models" - pricing strategies are deliberate Let’s take a look at a few enduring pricing strategies from the behavioral sciences to provide inspiration and insight on how to effectively set your prices. Limiting choices helps combat “analysis paralysis” – Having too many options can be demotivating. According to research from Yale: if two similar items are priced the same, consumers are often less likely to buy one than if their prices are even slightly different. In one experiment, researchers gave users a choice of buying a pack of gum or keeping the money. When given a choice between 2 packs, 46% made a purchase when both were priced at 63 cents. BUT when the packs of gum were priced at 62 and 64 cents, over 77% chose to buy a pack. The point here is not to set your identical T-shirts at variable prices, but to recognize the why behind it: when similar items have the same price, consumers are inclined to defer their decision instead of taking action.
  10. 10. Leverage Price Anchoring – Placing premium products and services near standard options may help create a clearer sense of value for potential customers, who will view the less expensive options as a bargain in comparison. Apply Weber’s Law -The principle known as Weber's law is often applied to marketing, particularly to price increases for products and services. There's no magic number in pricing, but Weber's law shows ten percent is the average point where customers respond. But with many variables having an effect on pricing, Weber’s law serves as a testing point rather than as an ironclad rule. Reduce Pain Points – your brain is wired to “spend ’til it hurts,” according to neuro-economics. The limit is reached when perceived pain is greater than perceived gain. So reducing pain points can not only increase post-purchase satisfaction, but also customer retention. Ways to do this include rethinking a product's value, offer bundling, appealing to utility or pleasure, and use of conversion words. Price with Nines – Ending a price with the number nine is one of the oldest tricks in the book, but does it really work? The answer is a resounding yes, according to countless studies and endless split test results. Sale prices—“Was $60, now only $45!” - will often able to beat out the number 9 by itself... BUT when the number nine is included with a slashed sale price, it outperforms lower price points. Contextual Pricing – Did you know customers are willing to pay higher prices for a Budweiser if they knew it was coming from an upscale hotel versus a run-down grocery store? This is why people will pay more for a “multimedia course” over an eBook, even if the information offered is exactly the same. Test Out Your Pricing Levels – Selling a monthly membership? Try testing annual pricing points with BIG bonuses versus just the monthly option. Or sell a product in tiers based on the budget or size of your target audience. Keep Pricing Simple – In EVERY SINGLE TEST we've run across dozens of niche markets and industries - the ZERO cents options dominates all others. For instance, $1499.00 AND $1,499 will convert WAY LOWER than simply using $1499 ... the higher the price, the more this law holds true.
  11. 11. Be Smart With Your Pricing Strategy Great products and services are priced on purpose. Their pricing evolves with time and is guided by testing, scrutiny, and most importantly, feedback from paying customers. As with all looks at academic research, view this article and other business research as a fair jumping-off point for inspiration, but not the finish line. Pricing Strategy Matters, But Great Products and Services Matter More Hopefully this gives you a great overview of the pricing models and pricing strategies available to you, and a few methods you can use them to help price different kinds of products and services. But if you take one thing away from this article, let it be this: no matter how well you price your product or service, nothing can make up for the importance of having a truly great product or service. Your customers will tell you whether you have a great product. Make sure you listen.
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