Price is the most important decision a retailer makes in planning for the holidays. In fact, it’s more important than any other marketing or merchandising tactic during the holiday season. That’s because you can’t have too much margin (profit), but you can definitely have too little. So how do you know what price to charge? The answer lies in understanding how your customers shop and make purchasing decisions as well as what they value when they make those decisions.
The key to determining the right price is to understand how much customers are willing to pay (customer value)
Now that you know your customers’ value, it’s time to determine what the right price is. The key to doing this is understanding how much customers are willing to pay (customer value). Customer willingness-to-pay can be influenced by any number of factors, including:
- How much they value the product or service. This involves both tangible and intangible benefits, such as convenience and enjoyment. For example, if a customer values convenience more than quality and features when buying a new car stereo system for their vehicle, then they might be willing to pay more for an installation kit than for a high-quality speaker system by itself.
- How much they need or want the product or service. This involves both practical considerations like functionality as well as emotional ones like status symbols or lifestyle choices (e.g., “I need this because it will help me achieve my goals”).
Think about these three things when setting your holiday prices:
The first step in setting your holiday prices is to determine what makes sense for your business. You need to be able to clearly explain why you’re charging what you’re charging and how that benefits customers.
Next, think about how your pricing strategy will affect your competitors’ offerings during the holidays. If they’ve already set their prices at a certain level, there’s no reason to undercut them by selling a similar product for less money—unless there’s something unique about your offering that makes it worth paying more for (more on this below).
Finally, consider the time of year when setting your price point: if Christmas-themed decorations are outselling Halloween ones by 40%, follow suit and upcharge accordingly!
You need to offer competitive pricing on products that are high value during the holiday season
So, you know the importance of your pricing strategy and have a great idea of what the right price is for your products and services. But how do you determine those prices?
To start, consider the following: price is the most important decision that retailers make in planning for the holidays. It’s also one of the most complex because it involves many variables including consumer psychology and competitive offerings. However, when it comes down to making a decision around price points and ultimately setting them, retailers need to understand how much customers are willing to pay (customer value).
As we look forward to the holidays, there are many things to consider when planning your pricing strategy. Price is an important part of the equation, but it’s not everything. If you want to maximize sales and profits this holiday season, make sure that your prices are right for your customers.