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Personal Branding

How to Price a Product: 3 Best Practice Strategies

May 19, 2022 by

This is a guide covering how to price your product.

We’ll be covering the following topics (click on a topic to jump to that section):

Table of Contents

What is Price?

In its simplest form, price is the amount of money buyers are willing to pay and that sellers are willing to sell a product or service.

How to Control Price?

Your ability to control price, whether it’s a product you’re selling, or a service you’re offering is directly related to the quality and execution of your marketing plan and understanding of the Marketing Framework.

The main components that let you have control over your pricing strategy are the Positioning and Brand Image building blocks.

I have written guides on each building block as well as the Marketing Framework. You can find them in the links above, so be sure to check those out and it will help set the tone to understand pricing strategies.

Psychological Value Perception Factors

While pricing may seem as simple as just setting a price then leaving it at that, there are many value perception factors that have an influence on price:

1. Positioning

Positioning has a factor on pricing. It’s important to have a positioning strategy in place.

Positioning involves creating an image of your product/service that fills an unfilled need that your target audience has. The analogy we use, is like a lock and key:

brand image positioning lock and key
Lock and Key Analogy

Positioning can have the greatest influence on value perception and the price you will be able to set.

If an image is created of your product/service that is upscale/high-quality, then you can set higher prices.

2. Brand Image

Similar to positioning, your brand image has an influence on the price you will be able to set.

Companies/individuals that are perceived as leading in their market can charge higher prices because they are the leader.

Implement a successful brand image strategy and you can become the leader in your target niche and charge higher prices.

3. The Product/Service

The product/service that is being sold also has a factor.

The product or service itself actually has to be of high-quality at the end of the day.

You can implement a successful corporate image or positioning strategy and implement every psychological pricing factor in the book, but at the end of the day your product/service needs to be top notch.

good product
product/service

4. Price

The price that is set is another psychological value perception factor.

If the buyer does not know who you or your company are, then the only way to determine value on paper is based on your current price.

You may be tempted to offer lower prices than the rest of the competition so you can get more clients and make more money.

Going back to #1 and #2, if you do not have a solid positioning or corporate image strategy yet, then buyers are only basing your business on your price.

If this is the case, then the perception of your quality of work is lesser than a competitor who has higher prices because oftentimes lower price = lower quality.

5. Distribution Channels

The distribution channels you are offering your services is also an important perception factor.

For example, only offering you services via Instagram by people DM’ing you versus you having a website with a dedicated pricing page, portfolio, etc.

create a website
a website is the most popular distribution channel

The same example can be seen with clothes. As a buyer, I’m sure you are willing to pay more for clothes in a store versus on a beach walkway such as Venice. This is due to the channel the product is being distributed on.

The channel your product/service is on is important, that’s why it’s always recommended to create a website to have a higher psychological value perception of your product and brand.

6. Promotion

The way you choose to do promotion also affects value perception.

If you choose to promote via Facebook page or via a blog or email newsletter makes a difference.

For example, let’s say you are a photographer.

If you promote that you are having a Portrait Session Sale, which do you think will convert better, posting an announcement on your Facebook profile or sending an email to existing and previous customers?

Unless you have thousands of Facebook friends and you friended all your clients, I’d say the second option.

It’s important to understand each promotion channel and determine which is best for you while staying aligned with your positioning and brand image strategy.

7. Feedback

Feedback is also a crucial value perception factor.

After selling a product, it’s important that you survey them and ask for a review.

Collecting feedback from customers can add value in the minds of your customers and help you know what to improve on.

Pricing Strategies

Here are some common pricing strategies to be aware of.

Depending on the strength of your “brand” (brand image and positioning), you can implement some of these pricing strategies.

The goal and objective of price strategies is to help sell the product or service, increase profits, increase market share, sell other products or services, and achieve the goals of your marketing and business plan.

1. Leader

If you are one of the “leaders” within your niche, then you can charge more than the competition.

Oftentimes, when you think of the “leaders” within your niche, these might be individuals that are more well known/more “popular.”

Maybe they have a big social media following, have photographed celebrities, or are just really good at marketing.

Either way, these leaders would be a perfect example of people who have achieved a strong positioning within their market.

If you have this person in mind, think about their “brand.” Is it strong?

Do they have good promotions, a good corporate image (logo, name, website), and a good product/service (they have great photos)?

If this is true, then I hope you can start to see how I mention pricing alone isn’t a strategy and needs to tie into all the components of the Marketing Framework (this guide is tailored to photographers but applies to all).

Once they all work together successfully, you can become a leader within your target market.

leader
Leader in Market

2. Match Competition

Another pricing strategy is to match the competition excluding the leader in the market, because they can charge more remember.

If you don’t know who your competition is, then that is the first step to figure out.

A quick Google search is easy to figure this out. Say for example you are a New York Portrait Photographer, just Google “New York Portrait Photographer,” take note of all the websites and people that show up, write them down and visit each of their websites to see how they are pricing their photography services/packages.

The key here is to find competition that is on your same “level.” You can figure this out by viewing their portfolio.

Once you find the competition that is similar to you in skill level, you will want to check up on your competition every once in a while because you want to monitor their pricing and adjust your pricing based on theirs.

You will want to match them as close as possible.

If you are charging much less than them, then your product/service can be seen as “lower quality” because as mentioned earlier in the value perception factors, if the buyer does not know who you or your company are, then the only way to determine value on paper is based on your current price.

You also don’t want to charge too much more than them.

Unless you start implementing a stronger positioning strategy, producing better photos than the competition, and the other components in the Marketing Framework, then that is when you can raise prices a lot higher than them because you are now a “level” above where you were at.

3. Loss Leader

The loss leader pricing strategy ties into more of a promotion strategy but it also has to do with pricing so I wanted to include it.

A loss leader pricing strategy is when a company prices its product below cost to get buyers “into the door” and visit the store or website.

An example of this can be seen with products such as milk and eggs at a store.

They are often sold at discounted prices (a loss leader) to draw customers to the store where they will often buy plenty of other regular priced items. This is also a reason most milk and eggs are at the back of the store.

discounted price
Loss Leader – Discounted Price

Another example is with Gillette. They would sell their mechanical razor well below cost to draw the new buyers and get them “into the door.”

An example of this working for a photographer is if you offer other products along with your photography service.

Let’s say you are a wedding photographer and you also offer a well-designed photo album binder that would hold all of the photos you took of their wedding.

You can offer the well-designed binder at a cheap price that would attract couples about to get married.

If you get them “in the door” and then they see your wedding photography portfolio, they could hire you as their wedding photographer as well.

Bundle Pricing Strategy

As creators, we often have other products outside of the service we offer.

This is where a bundle pricing strategy could be of benefit.

Bundle pricing is when you sell multiple products together while giving a discount to the buy for buying them as a bundle.

Here are the two main reasons you will want to offer bundle pricing:

1. Locks Out Competition

Bundle pricing can lock out buyers from going to the competition.

2. Give Buyers an Incentive

Bundle pricing also gives another incentive to buyers to work with you and buy your products or services.

Let’s say you are a portrait/beauty photographer and you also have experience in professional photo retouching (skin retouching, color correction, etc.).

You will want to bundle your photo session + photo retouching services into a package while giving a discount to buyers if they buy it together.

By doing so, the buyer will not have to also hire a photo/skin retoucher to touch up the photos you take and it gives them an incentive to work with you because you offer the bundle.

Think about all the products and services you offer and see what you can bundle together that would make sense!