Types of Pricing Strategies

Your pricing strategies must be consistent with all the other strategies that are in your business plan that you’re executing in your business, and I call this internal consistency where you’re actually looking in your everything is consistent throughout your business. That’s what we want. And what we want to avoid is internal inconsistency where the strategy doesn’t line up with the pricing strategy. So, your other strategies such as positioning strategy. Let’s say that you have a premium product and you’re offering it for a low price, that’s internally inconsistent. They don’t match up, in the customers mind it doesn’t match up. Why is this product so great quality and we get it so cheap?

And there’s a big question mark over your offering there. And that’s not what you want, that’s an example. Next strategy is branding. So, I’ve got a high-end brand like our Hermes but it’s on sale. It’s on discount, on fact Hermes just like the Four Seasons never goes on sale. There’s never a discount, in fact Four Seasons actually charge the same price throughout the year, which is very interesting for hotel. They’re very unique unique in the way that they do that because there’s never anything on sale.

The only thing that Four Seasons will give you is maybe a night free if you stay four or five nights, that’s their version of a sale, because they want to make sure their branding is consistent throughout, brilliant strategy. Competition, so you got a lot of competition and your competition is charging in a certain range and all of a sudden, your price is double or triple that, that’s an internal inconsistency as well because nobody’s going to buy you especially when there’s not a lot of differentiation.

So, you’re going to need to think up a new strategy for that, and finally target market, target market is where you’ve got a low-end demographic for target market, you’re trying to charge a high price, again that internal inconsistency exists So, I want to make sure that you check your pricing strategy against all your other strategies in your business plan to make sure they’re consistent.