Promotional prices work because if you offering a good price, then chances are people will purchase whatever you are selling. Discounts work for both merchant and shopper because it allows the merchant to map the potential market while allowing the shopper to find what he or she wants for less. Additionally, if the shopper thinks the product is worth their money, you may gain repeated business after you adjust it to its regular cost as long as it is not unreasonable priced.
This approach is successful because it cuts the risk that comes with buying a new product while getting no money back guarantees if you are not pleased. Paying less equates to losing less for most buyers.
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.
What you need to know when planning promotions
If it works out the way it should, your first stock should reveal how profitable a product is. This being the case, it must earn the money you invested and more. Being that this is the first time, you may make less than you would like but as long as it is not a loss, this is fine. The profit should be better once you start charging full.
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
Reveal what your intended regular price is going to be after the introductory period so persons can know if it will be worth the money as they use the product. Also, this can be used show them how great a deal the introductory price is.
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.
Lots of people are going to be using the Scottrade promotions here to promote Scottrade’s product, so see how they do it and learn from them so you can get some ideas too.
