When the Price is Right: 5 Pricing Techniques to Maximize Sales Revenue and Profit
04. Leader Pricing
Leader pricing is pricing certain items lower than normal to increase customers’ traffic flow or boost sales of complementary products. Some retailers call these products loss leaders. In a strict sense, loss leaders are sold below cost.
The best items for leader pricing are frequently purchased products like white bread, milk, and eggs or well-known brand names like Coca-Cola and Kellogg’s Corn Flakes.
5. Odd Pricing
Odd pricing has a long history in retailing.
In the 19th and early 20th centuries, odd pricing was used to reduce losses due to employee theft. Because merchandise had an odd price, salespeople typically had to go to the cash register to give the customer change and record the sale, making it more difficult for salespeople to keep the customer’s money. The theory behind odd pricing is the assumption that shoppers don’t notice the last digit or digits of a price, so that a price of $2.99 is perceived as $2.
However it is important to remember this:
a. When customers are price sensitive, you should raise or lower prices so that they end in high numbers such as 9.
b. When price is not an important factor for customers, you should use even dollar prices and round-number endings to avoid devaluing your brand.
Learning from experienced retailers and marketers can help you review your pricing strategy from a different perspective. And if you haven’t used any of these techniques, please give it a go and let us know how it works for your small business in the comments section below.
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Photo: Akris
Sachinda Jayatilleke has always had a passion for business and now puts it into practice at Franchise Sales, where he helps customers find the best business franchise for their needs.
