Payment processing is a common concern for any business owner. Unfortunately, this concept can prove to be challenging for those with little experience. Not only must pricing strategies appeal to the client, but they should be used in combination with cutting-edge software services. Let’s examine some sure-fire tips and tricks.
Common Pricing Strategies
Selecting the correct strategy should first involve appreciating some of the most well-known methods. Of course, it is first necessary to identify the correct demographic. For the sake of brevity, here are four common models:
- Skimming
- Market penetration pricing
- Economy pricing
- Premium pricing
Skimming involves introducing a product at a relatively high price and then lowering its cost over time. The benefit here is that skimming enables a business to capitalize upon initial customer interest while undercutting competitors as they enter the marketplace.
Penetration pricing involves offering products at very low prices. In other words, this is the opposite of skimming. As customer interest gains momentum, these prices can be raised.
Economy pricing models are associated with targeting budget-oriented customers. Wholesale businesses are well-known examples of these strategies. Of course, it is first necessary to identify the correct demographic.
Premium pricing stresses the perceived value of a product. This technique tends to appeal to high-end clients who are not as concerned about how much money they spend at a given time.
Choosing Your Own Pricing Strategy
An effective approach to payment processing will always revolve around adopting the most relevant techniques. What steps can you take to ensure that the correct merchant accounts and payment gateways are selected?
Define Your Business Goals
This is arguably the most important issue to address. Do you wish to develop long-term relationships? Or, might you instead be interested in ablating local competition? Whether you hope to develop a bargain-basement business model or one targeted toward high-end spenders, clarifying your goals is crucial. You can then better appreciate what type of payment processing system is needed.
Perform Market Research
Whether referring to high-risk merchant accounts or standard credit card processing platforms, identifying your niche market is crucial. For instance, you can better understand what type of sales campaigns resonate with customers. There may also be times when specific payment gateways are suited for discrete geographical regions.
Furthermore, adequate market research helps to ensure longitudinal brand loyalty. This is obviously important when handling large merchant accounts that represent a significant portion of your income.
Identify and Analyze Your Customers
Similar to the market research mentioned above, developing a buyer persona is just as relevant. For example, what types of online transaction methods do they prefer? This is an obvious metric when selecting the most applicable payment processing solutions. How often are purchases made and what is the average size? Here are some of the best ways to perform these types of analyses:
- Automated email campaigns
- Information gathered from pay-per-click (PPC) platforms
- Social media feedback
- Opt-in surveys
Identify and Analyse Your Competitors
On the other side of the coin, what strategies have your competitors employed? This is often referred to as a “competitor analysis”. Do they prefer one type of credit card processing method over another? What are their price points when compared to your offers? Might they perform better at a specific time of the year? Are there specific products that seem to be extremely popular?
These are some of the ways to determine if you might need to modify your ongoing pricing strategies. Note that this should represent an ongoing process.
Creating a Pricing Plan
Let us now assume that you have followed the steps outlined above. How can you leverage this information in order to create an effective pricing plan? This is sometimes referred to as the “execution” portion of your overall strategy.
First and foremost, it is best to stick with one of the four pricing approaches outlined earlier. This will help to avoid short-term confusion. Secondly, choose the right software platform. Intuitive and clear merchant accounts for businesses can help to increase brand loyalty while ensuring that no errors occur during the final stages of client conversion.
Finally, remember that pricing plans are not static in nature. The chances are high that they will need to be modified over time. This could be due to seasonal issues when introducing a new product to the market or catering to a wider audience. Embracing an agile approach is the best way to remain well ahead of the competition.
Conclusion
Pricing plans involve payment processing, understanding your target audience, developing the right marketing strategies, and modifying these approaches when needed. Thankfully, there are many options at your disposal across the Internet. Above all, never forget that the price of the product will directly impact how your business is perceived.