A recent survey done by The NPD Group states that 85% of customers say that Price will be an extremely important or important factor in where they decide to shop in the future.
I would agree. In fact, I am surprised it is not higher because almost every single buying decision ultimately ends up being about price.
But before you go around slashing prices, you ought to look at how price influences each purchase.
It starts with what I call the Value Equation.
Does the actual price on the product match the perceived worth of the product? If it does, the item has Value and you buy it. That is the decision you and I and just about everyone else makes before we decide to buy an item. Every single time. Sometimes that decision takes milliseconds, sometimes it takes days or even weeks. That is how the buying process works.
You look at an item, decide how much it is worth to you, and then look at the actual price. If that price is much higher, you are not buying. If that price is much lower, you wonder what is wrong with it. Maybe it does not do what you thought? Maybe it is cheaper quality than you thought? Until you feel comfortable with the reason why it is much less expensive than you expected, you are not yet buying.
The key to successfully pricing your merchandise is to make sure the actual price matches the price the customer has in her mind. Often you might find you are pricing things too low.
Pricing is important. So is merchandising (it raises the perceived worth). So is having the right products. So is taking care of the customer.
Digging deeper into the statistics from The NPD Group, you will find that…
15% of the population did not list Price as “extremely important” or even simply “important”.
56% said Customer Service was extremely important/important.
60% said Convenience of Location was extremely important/important.
60% said Ease of Shopping was extremely important/important.
Get the price right and the do all that other stuff and the sales and profits will come.
PS To learn more about how Perception plays a role in Pricing, download my FREE eBook Pricing for Profit. You will be surprised at how many pricing mistakes you have made that are costing you real money.