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The Secret to Setting Prices

Posted On - 23/10/2013 15:09:48

Cost is a measure of worth - understand how customers value different things and you're onto a winnerGetting prices right is at the very core of business. Get it wrong and you'll scare customers off. Get it right and they'll not just be happy, you'll maximise profits too. But how do you find the right price? Indeed, what does right mean?

I've seen price setting using ‘what I think it's worth'. I've seen ‘cost plus' pricing or prices set using the internet as a guide. Problem is what you think something is worth may not be the same as someone else. Just because something sells at 30% mark-up doesn't mean something else can't at 150%. Or will only sell at 20%. And setting prices by the internet positions yours as though you're selling on it.

Price reflects perceived value. And that's the key – cost is a measure of worth. Understand how customers value different things and you're onto a winner. But you can't ask people ‘what's a fair price for this?' You won't get a straight answer. And watching how different prices impact sales is plain impractical.

What if you got out, visited other retailers and noted their prices? Surely that'd help? Well, on the one hand you'd know what they were charging. But on the other you'd have no idea what to do with what you've found. If all their prices were lower would you just reduce yours to match? If higher would you raise yours? And if their prices were all around yours would you price to the average?

Just because you've seen a price doesn't mean you know how good it is. Knowing the number on a tag doesn't tell you how well it performs. How satisfied that business is with it. Whether they just have or are about to change it. And you can't ask: ‘how satisfied are you with your prices?' Imagine the answer. But what if someone else could do this for you?

The RPC (Retail Price Comparison) is a unique, ground-breaking survey of resellers selling prices. There is no other survey like this run by anyone anywhere. Taking part gives you information you can use to review and adjust your pricing with more certainty that you've probably ever been able to do before.

Crucially, the Comparison allows you to set prices not by what you think might work best for you but by what is shown to work best for others. Interested? Want to set your prices based on genuine pricing and sales satisfaction gleaned from over 100 resellers just like you? Over the next few weeks we'll be setting out what you need to know about our survey as well as how you can find out more about it and sign-up to take part.

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