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The Single Most Essential Rule About Pricing | Inc.

After repeatedly blogging about pricing strategies, at this point I could probably write a book about it. (Hey, maybe I will….) However, in this series of columns, I’m boiling things down to their essence rather than trying to be encyclopedic.

So, when it comes to pricing, here’s the most essential rule–the pricing rule that always produces both the most sales and the most profit:

Never quote a price before the customer fully understands the benefit of buying.

Experienced salespeople at this point are all nodding their heads up and down, but for the rest of you, I’ll explain with some examples.

Let’s start with an environment with which everyone is familiar: retail stores. In retail, the price is placed on the product or under the product, so that you must look at the product before seeing the price. The idea is that you want the product (benefit) and then find out what it costs.

However, when customers already have a pre-conception of what a product should cost, retailers make the price larger than the product, like a sign in a grocery store that reads “1lb. Flour: $1.”

Products for which customers already have a sense of what they should cost (assuming normal economic conditions) and which don’t vary much from provide to provider are called commodities. Commodities are sold on price.

Read complete article here:

The Single Most Essential Rule About Pricing | Inc.com.

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