MOBE Review: Small businesses will often price their products too low, as a way of getting their foot in the door and establish a name for themselves. This is a one dimensional approach to pricing that might actually hurt the business more that it grows it.
Price Reflects Product Value
There is a general expected price bracket for certain goods, and if your prices fall to low from this perceived bracket, people will question the value of your product. They start wondering what corners you had to cut to achieve the low prices, and would question the quality of your product.
Do a thorough research and find out what people are willing to pay for products like yours. What is the competition charging? If your product has more perks than your competitors, you can charge a premium price to give your product prestige.
Price Reflects Strength Against Competition
People may also think that the reason you are underpricing is because your product isn’t really as good as the competitor’s, hence price is the only thing you can use to attract them.People buy value. They buy what a product can do for them. And they will only buy if they believe that what they are buying is worth more than what they are paying. If your customers believe that your competitor’s product is better, they will likely go for it even if it is slightly pricier.
Low Prices Equal Low Margins
Lower prices might bring in more sales, but they will also lower the profit margin. You will end up with a lot of sales and not much to show for it. The incoming cash from the sales will just be reinvested into producing more products that do not generate profit.
MOBE Review : When deciding prices for your products and services, always remember that perception is key. How your customers view your product will determine what they are willing to pay for it. The good news is that you can use pricing to create a favorable image of your product if it is new to the market. When you price your new products at a premium, people will usually associate it with high quality and might even view it as better than your competitors, making them choose yours.