1.Market Penetration Pricing
Market penetration pricing is a strategy intended to help a business penetrate a new market. Whether you’re just opening for business and want to make a splash or are hoping to attract the attention of potential new customers, penetration pricing can help you do it.
- Cost Plus Pricing
Cost-plus pricing is most commonly used in products businesses, and it’s based on a simple markup. Figure out how much it costs you to manufacture your product and then add a percentage on top of that. Be sure it’s enough to cover your overhead, indirect expenses as well as direct costs while leaving room for profits and free cash flow.
- Target Profit Margin Pricing
Target profit margin pricing is similar to cost-plus pricing but it looks to generate a target profit margin – rather than a simple markup. As a result, the upside has no limits (except what your customers are willing to pay) and your pricing strategy will always shield your business’s financial health.
- Value Pricing
Rather than considering your costs alone, value pricing also considers the perceived value of your business’s products or services. Value pricing enables business owners to set their prices based on the true value – not just the costs – of their services.
If you offer premium products, white-glove services, or services that require specialized expertise, then your value pricing is likely the best pricing strategy for your business. You’ll be able to build in healthy profit margins and you won’t need to be afraid of selling yourself short.