Pricing is one of the most important decisions you make as a small business owner, and before you go ordering price tags for retail, you have to consider your pricing strategy. Not only this, but the design of shelf tags and retail price tags can also make a huge difference when 82% of all shoppers are making their decisions about buying once they’re already in the store. The key is a pricing strategy that works out the price point where your profits are as high as they can be, while your sales are maximized and customer interest is attracted by store signage. Try to make too much profit and sales will drop. Make too little and it won’t matter how many sales you make.
Things to Consider in Pricing Strategy
When you’re thinking about how to set prices, you need to think about production and distribution cost, know what your competitors are offering, understand positioning strategies, and also know your target customer base. Those price tags for retail not only need to grab customer attention (after all, 68% of consumers make a buy because of a sign that got their interest), but 55% of retailers realize that they have to be able to respond quickly to any changes in a competitor’s pricing. In-store marketing, shelf tags, and signage of all types is crucial to getting the outcome you need.
- Economy pricing to attract volume of customers. One strategy is to keep prices as low as the business can afford, encouraging customers to forgo frills that cost money to keep up. For companies with a large base, this strategy can work really well. For a smaller business, though, this can be dangerous since a lower volume of sales makes it harder to get enough profit. However, lower prices specifically targeted at loyal customers can help to guarantee their loyalty for a long time.
- Use psychology pricing wisely. This is pricing designed to convey that a customer is getting a better value than they really are. The most common way of doing this is by decreasing the value of something by just enough to lower left-most number on the price tags for retail. For example, blueberries at $3.99 a pound will always sell better than the same blueberries at $4.00 a pound, in the absence of any other branding or promotion. People always give the first number on the left the highest weight, and the next number the second-most weight, and so on. A computer priced at $1,299 will sell better than one priced at $1,300 for the same reason.
- Use premium pricing when you have an early product. This is a risky strategy since it involves pricing an item higher than a competitor’s similar offering. It can have a big payoff, though, if customers perceive the item as being worth the cost, either because of limited availability or high quality. Apple’s Airpods are a good example of this strategy, priced as they are far higher than earbuds or headphones of that style normally are. The price combined with the quality and Apple’s reputation is actually attractive since it communicates value and desirability.
The Design of Price Tags
How you choose and use your price tags for retail can be almost as important as what prices you put on them. A clear, computer-printed tag conveys a sense of fairness about the entire transaction, while a hand-written tag can give an impression of personal care or enhance the desirability of a handmade or custom item. Including prices per ounce or per pound for food or beauty items can help enhance the customer’s feeling that he or she is getting a good deal, while tags with the original price point included showcase the value of a sales item.
Somewhere between six and 10 of the purchases made at the average store are impulse buys. Make sure your shelf tags and last minute promotions are on target to get you the business you need.