Is Your Approach To Pricing Holding You Back?

0 Flares Twitter 0 Facebook 0 Google+ 0 LinkedIn 0 Email -- Buffer 0 0 Flares ×

on-line-pricing-strategyMost online business owners (and entrepreneurs) have a common issue that can make the difference between a thriving, successful business, and eking out a living working all hours for little return.


No matter how confident you may be about your products or services, when it comes to deciding how much to charge, the likelihood is that you’re similar to most other on-line business owners, and have real difficulty in knowing where to pitch your prices.

There’s a huge amount of psychology behind the issue of pricing.

All you need to do to see this is wander in to your local supermarket.

Every supermarket chain in operation today has invested a huge amount of market research and analysis in to the problem of pricing, and are only just establishing tried and tested ways of increasing sales and making a profit, without slashing their prices to ridiculous levels.

Using Established Strategies For Pricing

As small business owners, we don’t have the luxury of employing a crack team of psychologists to establish our ideal pricing strategy for us.

The good news, however, is that we can piggyback on the psychology used by supermarkets to learn a very good trick for sales, that will make sure that we keep every customer, regardless of what their budget or expectations may be.

Understanding The Pizza Principle

Have you noticed how, in your local supermarket, every store has a range of different brands?

Tesco, for example, has their ‘Finest’ range for people looking to spend a little bit more and get some luxury in their products.

Instead of a cheese and tomato pizza, they’ll sell us a Margarita flatbread with sun-ripened cherry passata, with buffalo mozzarella.

It’s the same old cheese and tomato pizza that we know and love, but uses more expensive ingredients and some very flash marketing to persuade punters to part with their pounds.

Meeting The Needs Of All Consumers

If the ‘Finest’ range isn’t to the taste of every consumer, they also produce a ‘Basics’ range.

The Basics cheese and tomato has less topping, comes in cellophane rather than a beautifully crafted box, and costs much less to produce.

It appeals to people who want a pizza, but don’t want to be swayed by the aesthetics of their dinner.

They just want cheese, tomato, and pizza base.

They’ll spend a minimal amount, and go away happy knowing that they have the most economical pizza available in the store.

For yet others, there’s a third option.

The ‘middle of the road’ pizza, which features nice packaging, a bit of care in the assembly, and a mid-range price tag which suits people who don’t want to spend a fortune, but also can’t quite bring themselves to buy basics.

All three options provide pizza.

However, there is a world of difference between one and the other, if not in terms of the product, but certainly in terms of the psychology behind it.

Pitching Price, Pizza-style

So, how can an in-depth knowledge of mozzarella and marketing help us to pitch our pricing properly?

In fact, it works to the very same principle as the pizza.

When our customers come to us, it’s a known fact that if we charge too little, we’ll immediately alienate half our potential market, as they automatically assume that we aren’t very good at our job.

If we only charge $10 an hour for our services, then we obviously have too much time on our hands, too few customers, and too little experience to be a power player in our industry.

Similarly, if we charge $1,000 an hour, we’ll price most consumers straight out of our market, and give the impression that we are overcharging for services which they can get cheaper elsewhere.

The trick for pricing is to make it like Tesco.

Offer your customers a range of options, and let them decide for themselves what they want to pay, and what level of service they think will best suit their needs.

Offer a basic package for those customers who want what you provide, but don’t care about extensive service.

Provide a completely managed service or exquisite product with every add-on and benefit you can come up with as your ‘Finest’ range.

Thirdly, give a middle option which has more features than your lowest priced option, but without the frills and finery of your ‘Finest’ package.

How Tiered Pricing Will Bring You More Business

A tiered pricing structure brings a number of benefits.

It helps your customers differentiate between different levels of service to work out what they most need.

It stops you pricing yourself out of range of some customers, and it also prevents you from looking too cheap to appeal to clients who gain reassurance from a decent charging system.

Best of all, it helps you differentiate within your service structure to establish exactly what you are prepared to offer, for what price.

This will help you work out just how much your products or services are worth, and have the confidence to pitch your prices at their true value, every time.

If you still aren’t sure about the value of this strategy, consider the wise words of G. A. McKevett:

“There’s very little in the world that a foot massage and a thin-crust, everything-on-it pizza won’t set right.”

What’s your views?

How do you price your services / products?

Please share your views in the comments below.

0 Flares Twitter 0 Facebook 0 Google+ 0 LinkedIn 0 Email -- Buffer 0 0 Flares ×

16 Responses to Is Your Approach To Pricing Holding You Back?

  1. Debbie April 3, 2013 at 9:51 am #

    Great tips on pricing our products Andrew. i love the pizza example!

    When it comes to me shopping though the first thing that I look for is the SALE. i have notice on the internet they use that, but also add free products included with what they are sale.

    Thanks again, love your wisdom when it comes to bloggers.

    • Andrew April 4, 2013 at 12:39 am #


      Many people on the internet use the ‘sale’ approach and I think it can be used in certain cases. I.e. Black Friday or Cyber Monday etc. As long as the price goes back up after the sale is over. Otherwise buyers could feel they have been conned / scammed.

      With regards to free products – normally bonuses – again they have to be worthwhile. Far too many products sold on the internet have worthless bonuses added to try and sweeten the overall product.

      Best approach is to add some really worthwhile bonuses like 1-on-1 support rather than another e-guide!


  2. Andrew April 4, 2013 at 12:40 am #


    I am surprized you don’t get the choice in US – even in Walmart?

    And I agree – you do have to experiment with price.


  3. Steve April 4, 2013 at 12:49 am #


    I like this approach. I suppose I do take this approach to a certain degree. I offer a number of different Hypnotherapy block sessions. I.e. £x for 1 session, £y for 5 sessions, £z for 10 sessions. And the more sessions you buy, the best value per session.


    • Andrew April 4, 2013 at 12:51 am #


      I understand that approach. And perhaps you could add free copies of your books if your buyers order over a certain number of sessions?


  4. Pritam Nagrale April 4, 2013 at 3:20 am #

    I love to experiment with different things on my site to find out what works best to boost my sales. All your tips provided here are best & I would like to check which tip will get me the maximum sale.

    • Andrew April 8, 2013 at 4:41 am #


      So what action will you be taking to see which tip gets you the maximum sales?


  5. Jane April 4, 2013 at 7:23 am #

    Piggy back is the most convenient way to price things. But going too much after it can be a danger. It is always good and safe to know the value of the product or service one offers. We need to take a step back and ask ourselves how much we would pay for it in the first place.

    Also pricing a product lower than the competitors to survive in the market is a cheap tactic.

    • Andrew April 8, 2013 at 4:42 am #


      Tell me more about what you mean by Piggy back?

      I agree with your point and pricing a product lower than the competitors. You should price it as its optimum value.


  6. caretakerray April 4, 2013 at 7:31 am #

    Pricing can be problematic. I love the idea of giving choices for different levels! “A service for every budget” is my motto.

  7. Emily April 8, 2013 at 1:24 am #

    Hi Andrew,
    I have seen these types of pricing before on hair salons but have never really thought about applying such pricing methods on how I price my products. While this is not really new, it is you who imparted the idea on how I can approach pricing some of my products much better. Thanks.

    • Andrew April 8, 2013 at 4:43 am #


      Will you be taking any action as a result?


  8. Harshit April 8, 2013 at 11:50 pm #

    Tiered pricing is certainly a good way of ensuring that not only you get a good price for your product or service but also that the customer starts seeing you as an authority figure.

    • Andrew April 10, 2013 at 11:03 am #


      Why would having tiered pricing make you an authority figure?


  9. Danilo April 11, 2013 at 4:45 am #

    Deciding how much to charge is one of the most important things when running a business

    • Andrew April 24, 2013 at 8:21 am #


      Most important and can be hardest to get right. Want to share any of your experiences?


Leave a Reply

Please note: Here at, we welcome your comments...supportive, critical or otherwise. However, we censor and delete all comments if they contain the following: Off-topic statements, links to sales pages or services, abusive content, vulgarity, personal attacks, spam or simply saying 'nice post...keep it up!'. Those who violate this policy will be blocked from commenting.

0 Flares Twitter 0 Facebook 0 Google+ 0 LinkedIn 0 Email -- Buffer 0 0 Flares ×