People will buy almost anything once they feel they are getting it at a great price. This is one of the reasons introducing new items at a promotional prices is always a good idea. Not only do buyers get a deal, you also gain a test market. At the end of the day, once they think it was worth buying, there’s a high possibility that they’ll buy it for whatever the full price is, so long as you make it reasonable.
The basis behind the approach is simple; not many people are willing to pay for a product they don’t know, especially if they aren’t guaranteed to get their money back if the product fails to live up to its promise. If the potential loss is small, you stand a better chance of convincing them to take the risk.
Also, if the product is new to you as a seller but not necessarily to the market, you will have to find a reason for potential buyers to abandon their regular merchant and do business with you. A promotional price suggests that you are giving them the best possible price, not just in comparison to what you intend to sell it for in the future but also compared to what others are selling it for.
How to set promotional prices
Ideally, your introductory stock should allow you to assess the products profitability. This means you must make back what you spent and a profit. You may have to settle for a smaller than desired profit at first but, make sure you do not come out with a negative balance sheet.
Before you do anything look at all overhead costs, what the competition has it for and the regular selling price most ideal for making a good profit. Once you know this, start marking the price down to find an introductory rate based on the percentage of the regular projected profit you are willing to forgo.
It’s ok if you are not satisfied with the profit from the initial rate. Market research is your overall aim, not just maximizing profits. That can come after. When the promotion starts, pay keen attention to what people have to say about your product and cost.
Recommendations for settings your price
Make regular prices visible so people see them while viewing the initial costs. This way they know beforehand how much your product will be worth and can decide while using it if it’s worth the actual cost. They can also see how much they’re saving by buying it now. This can result in more customers or more purchases per customer.
Always use this time to show them how you stack up against the competition by pointing out how great you promotional prices are when compared to prices elsewhere, the logic behind this is the same as above.
The Travelocity promo code that’s often available is a good example of using promotional prices to urge the customer to take advantage of the deal so check it out and learn a few things along the way.