Pricing 101: Terms & Strategies You Should Know

The first thing any business owner or merchant learns entering the market is that price is never just one particular number.

Price is such a multileveled matter that, in many ways, sound price management determines the overall success of the enterprise. And from this point, the difference between net price and list price and balancing between them is the primary skill for any merchant.

In this piece, we will discuss the true meanings of pricing terms that you might have heard most of the time.

Let’s start with the list price. It is the amount of money a customer is supposed to pay for the product or service before any possible discounts. In other words, a list price is the highest possible price a customer would have to pay if he buys from you.

The list price is based on two primary factors:

• The costs of a particular product or service development for your business
• The average price for the product’s or service’s analogs on today’s market

Now, let’s continue with the net price.

The net price for your product and service is the final and actual price a customer would pay after all the discount and promo reductions.

Want to learn in detail? Read our blog post: Net Price and List Price: What is the Difference between Two Concepts?

After explaining some of the crucial terms in pricing terminology, let’s look at the following terms.

Have you ever heard of price perception?

One of the most intriguing subjects for marketers is how consumers perceive prices. When they see a price tag, can they rationally evaluate the costs, industry norms, competitor prices, etc., before purchasing? And what are the ways to influence their price perception, as well as their final decision?

If shoppers perceive price in its positive-weighted side, it’s more likely that they’ll purchase the product.

A fundamental duty of a marketer and a pricing specialist is to find the perfect perceived sacrifice/perceived quality balance. So, they need to price a product to attract many customers and maintain the perceived quality to a certain degree.

It would help to look at the factors affecting your price perception.

To learn more about price perception, read our blog post: Price Perception: How Consumers Perceive Price & What to Do.

See u next time! 👋