December 13


How to Design The Perfect Pricing Strategy For Your Business

By Georgia Davis

December 13, 2019

How to Design The Perfect Pricing Strategy For Your Business

Are You A Commodity?

The fact is, too many people compete on price.

Now, there are some markets where this is genuinely unavoidable.  These are where you are selling what we call “commoditised” goods.  So, for example, petrol is a commoditised product.   

So, assuming that at least part of your business is not commoditised in any way, then let’s set about maximising your price. I chose those words very carefully because in most businesses there is significant scope to increase your prices.  

Four Way To Increase Your Prices

There are four big things that you should be doing in your business that will help you to increase your prices without your customers even batting an eyelid:

  • Differentiation
  • Premium Up-sell
  • Packaging
  • Price Presentation

Differentiate Your Product Or Service

Imagine for a second that you sell garden sheds. Now, anybody can buy a shed at B&Q for a couple of hundred pounds, and everybody knows it. Shed prices aren’t a big secret, they’re pretty much commoditised. 

So there’s no way that you could charge £5,000 for a shed, could you?

Well, how about if you changed the customer’s frame of reference, so instead of comparing the £5,000 to a £200 B&Q shed, they instead compared it to the much greater cost of a home extension?

YOU must control the comparative judgement made by your customer. DO NOT leave it up to them to choose the comparison to be made or it will not work. 

Premium Upsell

Adding additional premium products and services that you can sell alongside your existing products range is almost certainly the easiest place to start moving your average price upwards.


Packaging your product or service up, and serving it as part of a bundled offer can be a very powerful way of increasing the total price.  You’ll often see a bundle selling for more than the sum of its parts.

 A great example of a bundled package is a McDonalds meal; burger, fries and drink. All packaged and priced so that few people only buy two of the three because you’d only save a few pennies.  Most fast-food restaurants are the same because it’s a strategy that drives up sales revenue.

I don’t really go for ‘advanced thinking’ or the psychology of sales, but it’s true that selling is always about convincing your prospect that the value is greater than the price, and bundled offers often seem to convince consumers that they’re saving money by taking the package, even if it means spending more than they’d originally intended to.

Price Presentation

Presenting your prices in the right way is key to making sales at price points that your competitors can only dream about, without your customers flinching.

Here are a few ideas how to go about achieving this:

Individual Value Comparisons

This strategy adds up the individual values of everything that’s included in your product or service, creating a ‘total value’ price, which makes the asking price look like good value by comparison. 

Cost Avoidance Strategy

The best example to use here is the woman that calls an emergency plumber out to deal with a water leak.

The plumber quickly sorts the leak and hands his invoice to his relieved client.  She’s astonished, and says “£180? You were only here 5 minutes!” He replies “Yep, and I’ve only changed a 32p washer, but you haven’t got to replace the roof or carpet in your living room now, so I’d call that good value.”

The fact is, the plumber is right.  The hassle and cost of replacing water-damaged furniture and carpets far outweigh a hefty plumber’s bill and the exact same strategy can be used in reverse to sell many products and services.

If I was writing a sales letter for a pest control firm, I’d be focussing on the cost of the potential problem: the reactions of guests in the hotel, or diners in the restaurant to an infestation of rats, ants or wasps. The businesses involved risk losing thousands of pounds of revenue and untold damage to their brand and reputation if they did have a pest problem, so how much would they pay to have a monthly check-up from a pest control expert?

Monthly Instalments

If your product sells for over £1000, then the instalment strategy can work well. At this level, people consider the affordability of the monthly payments, and you might find that your market would prefer to make six instalments of £350, rather than three instalments of £650. Even though they’d be paying an extra £150 in total, the purchase would seem more affordable.


Don’t confuse a 10% or 20% uplift in price with a 10% or 20% uplift in profit, the profit uplift in percentage terms which be much, much more.

Here’s a very simple example:

Product price         £100

Product cost           £50

Profit                          £50


New price                £120

Profit cost                £50

Profit                          £70

A 20% increase in price led to a 40% increase in profit.

Want more advise like this?

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Georgia Davis

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