Once you know the minimum price you can accept to meet or exceed your breakeven, you are ready to price your products or services to achieve strategic business objectives. Pricing your product or service properly is one of the most overlooked marketing strategies you can employ to achieve the business results you desire.
Over the next three weeks, we’ll focus on several pricing concepts. By employing one or several of these strategies you can drive customer behaviors to meet your business goals. Today we’ll focus on the most common pricing strategy, Volume Discounts. The cost to acquire a new customer, if spread out over a longer period, allows you to offer a discount on volume purchases.
When you buy a magazine subscription you pay less the more years you order because the customer acquisition cost is spread over a longer period. Other times the shipping and handling costs are pretty much identical, even for larger sized units so you can spread out these costs over larger product volumes. The cost difference between a half gallon of milk and a full gallon of milk is only about 20%, even though you get twice the volume of milk.
Can you distribute customer acquisition and shipping and handling costs across a larger scale using volume discounts?
