Pricing Psychology: Should I show the best possible prices I can offer as my "list prices" or should I inflate them and offer more discounts?

I'm not sure what the best method is to show my prices: if I list my best/most competitor's prices, then I won't have much room to give out any discounts because I would be cutting my margins too thin.


Pricing anything is a little bit of science and art. It really depends on what you are selling. You'll be looking at cost plus or value pricing. If you're selling goods in a highly competitive market, you're stuck with pricing to beat competitors and product differentiation. If you're selling a service or you're lucky to have little competition, you could price based on the value your customer receives.

Any pricing strategy will have to start with an understanding of the market. If you'd like, we can find a time to talk and discuss your product and market.

Answered 8 years ago

There is more to pricing than this. However if price competition is your objective then your strategy should ensure that you have a cohesive marketing brand in place that complements whatever price you show. Either to not have to give discounts past your listed price or to have to offer discount. Make sure you look at it all together, is not isolated.

Give me a call if you need help, I have helped hundreds of business owners strategize their monetization models.

Answered 8 years ago

You're really going to have to provide a lot more information to get answers to your challenge, or talk to one of us.
If you are in a highly competitive industry where everyone know everyone else's pricing, you need to ask questions about discount management / containment, as list prices are pretty much irrelevant in those sorts of scenarios. Other questions that would help address your challenge include: Are we talking prices points of ~$2 or $20k? Are you selling B2B, B2C or both? Do you have a sales force? Where do you want to position yourself in the market? Would you like to shake up the industry with an alternative pricing model that can't be compared to the competition? If you're selling online, is your website optimised for behavioural economics monetization? The list goes on and on...
I'd get on the blower to one of us if I was you!!!

Answered 8 years ago

Inflate your prices and offer no discounts unless, of course, you want to kill your margins and go out of business.

Q: How much should you charge?
A: As much you can.

If your only competitive advantage is a low price, then you made a mistake a long time ago with your packaging and positioning. Go back to the beginning and start over.

If you need help, let me know. I'm happy to help.

Answered 8 years ago

I agree with what's been said - more information is needed. In particular, the questions of whether you are selling to B2C or B2B, the price points, the product structure, and terms/guarantee. My experience has been that B2C is more price sensitive in terms of using discounts to spur action. In combination with/or instead of discounts, also consider if there are any value ads you can throw in to make the value feel bigger. The value ads can also be taken away/changed to create a sense of urgency. The challenges in the B2B space are a bit different. The prospect may be looking to solve a pain point for themselves or for their team. Depending on the price point, they might also need to get approval from someone else in the company. A lower-priced product/service might be as simple as a credit card swipe, which gives you a shorter sales cycle and make it more transactional. A higher-priced product/service might require corporate buy-in, which means a longer sales cycle and more of an emphasis on ROI. If you product/service is structured with different tiers/options/etc, you can use this to influence activity. Do a google search for "dan ariely pricing" to see more. A final thought is on terms/guarantee. A pay-as-you-go product/service may not need to focus on discounts if the users can try the product.

Answered 8 years ago

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