Wednesday, January 20, 2010

Is Psychological pricing worth it?

What I believe it is an effective strategy; it does have its ups and downs. It’s part art and part science, and there are several factors, which go into the development of an optimum price. Sometimes people can see right through this & others can't.

It can be powerful marketing tool. It can be a problem that many businesses are plagued with; how to properly price your product for optimal return. Many customers/ clients still believe that you get what you pay for. A business shouldn't over charge just to raise up the price. But it should be done within a good current market range.

Of all the strategic decisions faced by an organization, one of the many important ones is setting prices for the various product and service offerings. The reason why so many products fail or produce such poor returns online and offline is because business owners, corporations and marketers may not know the exact right price to charge before a launch, after a launch, or what price to set years later when there are many new competitors and the competition is stiff.

Knowing the right price you should charge means the difference between financial losses, mediocre sales, or huge increases in revenue. Internet Research data shows that charging the wrong price online can easily drop total revenues by 50%, or more, and cause e-commerce failures. Knowing this valuable information for your product or service can make an enormous difference in your gross profits.