Products and services don’t just sell during the holiday season. They’re sold all year round and they must survive within their market. To make its mark and maintain appeal when compared to the competition, a product must be priced carefully and deliberately. Buyers are easily swayed by deals, and they respond positively when they believe they’re receiving the best possible price for the service or product.
Using pricing software for competitive pricing isn’t just slapping the lowest price tag on your product. First of all, that isn’t doing your product any favors. According to NetMBA, an archive for business administration articles, “pricing is an important strategic issue because it is related to product positioning.” That means the price of a product creates value for that product. In turn, buyers will respond to that placed value accordingly.
Smashing Magazine, an online publication for professional web designers and developers, echoes that notion: “There are no absolute truths or perfect formulas for finding the best price, assuming that the ‘best price’ even exists. … Perceived value can be different than objective value, and it can affect sales in ways that the demand curve does not predict.”
What does that mean? It means you should research the market the product will debut in, consider the competition, leverage your findings by experimenting with different methods of pricing (comparison, tiering, monthly subscription, etc.), market your product and then adjust pricing accordingly.
When deciding on the best price for the product, you must consider a price that will:
- Place the appropriate monetary value on the product
- Match the service value of the product with that determined price tag
- Consider your product against the price of a similar competitor’s product
- Take into account market activity and customer behavior
- Offer an irresistible price that potentially wedges the product within a market by providing buyers with a personally-derived value
- Drive revenue back to your business
That’s a lot. Either the sales and marketing departments can painstakingly go through the aforementioned steps, or your business can turn to pricing software.
Pricing software integrates with a business’ CRM software and ERP system. Some pricing tools also integrate with shipping software and inventory management software and product design software. All of these integrations further streamline the lengthy process that is deciding the pricing strategy of a product. For example, some pricing tools are geared specifically toward optimizing margins that will give the product a leg up against the competition. The tool will trigger and automate pricing updates based on market conditions. It can also process market (or competitor) data that a business can use to prevent wasted time and money on products or services that don’t — and won’t — sell.
Fortunately, G2 Crowd offers both a Buyer’s Guide that lists out the elements of pricing software you should consider before purchasing the tool. Additionally, we provide a comparison tool that displays products alongside each other, so you can get a bigger picture about the products’ features and capabilities. They are both significant resources you should mull over before diving into a pricing software that will benefit the end goal of your product (and business).