Top Startup Pricing Mistakes to Avoid
Seasoned companies often learn the tricks of the trade in terms of pricing through many years of trial and error. However, many startups make classic pricing mistakes simply because they do not know any better.
Startup pricing mistakes can cause your company to lose sales and fall behind your competitors. So, it is best to try to avoid them. Here are some of the top price mistakes to avoid.
1. Pricing products too high
Many startups price their products very high because they feel it will help to generate more profits. However, the problem with doing this is that it can lead to reduced sales. So, pricing products too high is actually a price mistake that can cause your business to lose money.
2. Pricing products too low
This is the other side of the pricing coin. If you price products too low, then too many people may buy your products, and you may lose too much inventory without generating high enough net profits. So this is another thing to watch out for.
3. Using irregular numbers
If you are not sure what number to price your product at, then you may be tempted to simply choose a random number, such as $23.83. However, the problem with doing this is that people often prefer to buy things that are priced in whole numbers, or at $X.99. So, if you choose a very unusual number for your price point, it can come off as suspicious, or tedious for the shopper.
The shopper does not want to have to think about your price to gain a frame of reference. He or she wants to be able to easily understand your price point. So, stick to whole numbers, or numbers that end in $.99.
4. Changing prices suddenly with no explanation
If your customers get used to your prices being set at a certain price, and then they suddenly go up without any justification, this can cause frustration. Your customers may get the idea that the pricing for your company is sporadic and unreliable. This could cause them to go to one of your competitors just to recapture stability.
So, if you need to suddenly raise prices significantly, you should explain this price increase to your customers. You can do this on your company website, or through an email, etc. If your business has a retail location, you can also explain the price changes to any customers who ask about them. This can help you to keep favor with them. However, it is best to avoid sudden, massive price changes whenever possible.
Startup pricing can be difficult to master for companies who are just getting started. In fact, it is normal for many price mistakes to be made. However, if your startup can avoid the price mistakes made in this article, then your company will be way ahead of the game!