With the British government finally conceding that it will need to meet its obligations and pay the EU’s so-called divorce bill, business sentiment in the UK received another hefty blow.
After all, rising soaring has already impacted negatively on consumer spending, while a perennially weak pound continues to hike the cost of imports while forcing businesses to adopt a more aggressive pricing policy.
Some firms have taken the more proactive approach of reducing other areas of their cost base in order to offer more competitive and frugal pricing to customers, affording them a competitive advantage in a difficult climate. Others are thinking outside of the box to optimise their pricing, so here are some steps to help you achieve this:
Allowing Customers to Name Their Own Price
We have seen the rise of the freemium business model in recent times, through which customers are afforded choice in terms of how and when they spend their money.
Some firms have taken this a step further, with Zest Business Consulting and their business coach Jennifer Martin actually offering new clients the chance to pay whatever they want for a two-hour business strategy session.
This is undoubtedly a high-risk approach, but it certainly builds trust with clients and lays the foundations for a more fruitful, longer-term relationship. This can optimise the potential value of customers over the course of their lifetime, with Zest converting 30% of new clients into loyal patrons after experiencing what the company has to offer
Reducing Shipment Costs Through National Partnerships
In terms of cost cutting, it is important that businesses target non-strategic commercial elements that do not impact directly on your bottom line. Taking shipment and logistics, for example, which many firms rely on and has the potential to eat into your margins if the process is not managed effectively.
You also need to strike the balance between delivering an effective service and reducing costs, and this is a challenge that many SMEs struggle with.
One potential solution is to partner with an established and nationwide courier such as Parcel2Go. This firm can ship parcels for as little as £8, while there is further opportunity to reduce costs based on bulk transaction.
It is important to bear this in mind, as this can reduce your costs base, optimise margins and enable you to steal a march on your rivals with more competitive pricing.
Embrace the Art of Psychological Pricing
While the economic climate may be relatively unique, the basic rules of pricing remain unchanged. In this respect, psychological pricing can still be used to exceptional effect in the modern age, as it can create the illusion of big savings and help to optimise your turnover as a result.
It has a relatively simple premise, as prices are set at a level where the human mind perceives it to be offer and offer greater value. These are typically price points that end in five, seven or nine, with the best example being to reduce the cost of a £10 to either £9.95 or £9.99.
This can optimise sales conversions without really costing your business anything in the way of discounts, particularly if you are able to reduce operational costs and boost margins.