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How to determine a selling price that maximizes your turnover and your margins?

Lowering your selling price to increase your sales and your turnover. Many companies have tried this, but pricing is a much more complex art than it seems. It mixes behavioural sciences and mathematical statistics.

Too many companies set the selling price of their products by adding their cost price to the desired margin. This approach is based on the intuition of the project leader and does not allow the company to maximize its return on investment.

We are lucky to live in a digital and collaborative era. Why not exploit the power of social networks to validate your business strategy and increase your turnover?

1. Capturing perceived value with your (potential) audiences

How to capture the perceived value of a product or service?

Today, large companies tend to define a large launch budget. They then note the feedback from the users of the product or service to improve their product and commercial strategy. However, test & learn does not optimize the product development time and requires a lot of cash for a launch phase.

So why not ask your customers and potential audiences for their opinions before the commercial launch? With Klacktools have been developed to test the appetence of different populations and return this data in a structured way. Determine an optimal pricing and sales strategy based on perceived value!

2. Asking the right questions and aggregating the right data

It is obviously not enough to ask whether or not the product appeals to a defined audience. The subtlety of perceived value lies in the "willingness to pay" of a population. The price estimation brings out the perceived quality, rarity and ability of the person to buy the product presented.

With Klack, dynamic mini-games are sent to the brand's audiences and to potential consumers in the brand's target areas, allowing the algorithm to propose different pricing strategies after analyzing this data. These mini-games are sent to audiences relevant to the brand and take the form of a series of playful, gamified questions.

3. Interpret the data and define your pricing strategy

Once the harvesting phase is over, it is essential to understand the different price ranges offered. Then make your choice according to parameters specific to each company (cost and production capacity, positioning, competitive intensity, and long-term strategy of the brand).

Klack, for example, offers different price recommendations for each population targeted by its surveys:

  • Revenue-optimizing pricing: This pricing is based on Van Westendorp's methodology, and presents according to this methodology the price that optimizes the company's sales quantities according to the perceived value of the product or service.
  • The maximum acceptable price: The maximum acceptable price is also based on Van Westendorp's methodology, but contrary to the first recommendation, it determines the maximum price acceptable to the target population. This maximum acceptable price is very relevant when the company has a demand that exceeds its supply, or when it has a certain notoriety to play on the notion of scarcity.
  • Price elasticity of demand:Price elasticity allows companies to determine in advance the impact that a change of X% in the selling price will have on the % of its sales, and therefore allows companies to determine even more precisely the pricing to adopt according to its production capacity.

Determine your selling price with Klack

Klack recommends prices that combine all the data according to the characteristics of your production structure.

Whether for products or services, Klack gives you the ability to create specialized surveys on your customers' willingness to pay. By surveying your market, you'll know who is most likely to buy your product or service and what price to set to maximize your sales and revenue. Just as Amazon or Spotify have done by surveying their customers, do the same to avoid getting it wrong and get maximum value from your product or service. Making decisions based on your customers & audience is the best way to make sure you meet their expectations and build loyalty.

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