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15 In How To/ Startup Life

Establishing Tiered Pricing

Establishing Tiered Pricing

Do you want to achieve a $1,000 sales goal for this week, month or quarter? The quickest way to making a thousand dollars is not 100 customers spending $10. That’s the long and drawn out way of achieving your sales goal. The fastest way to achieve a $1000 sales goal is having one customer spend $1000 on one product or service. Next, would be 2 customers spending $500 or 4 spending $250 or finally getting 10 to spend $100. How does one achieve this stature of high sales numbers versus the low ones they are used to? Tiered pricing is step up levels with pricing in products or service. Starting with a small number and limiting what they are receiving, all the way up to the highest level product or service you offer.

Determine Pricing Levels

First, let’s go to your website and do a little checking on your exact pricing. Lets use the example you own an online jewelry company. Your lowest level product should be at the $25 rate. You don’t want a product less than that unless it is on clearance. Otherwise, you are losing money on the product itself whether it be from purchasing wholesale, shipping or more. Your first level product should be the two digit product that is simple. Second level is better quality then the first level. This is your $50-$99 pricing level. Next you would have your $100- $499 products. Then you would hit your higher end products that are $500+

Are you hitting multiple price levels on your website or are they grouped around the same level?

Limit Offer on Levels

A customer should not be able to get a 14K gold bracelet for $25 on your website. That skews your level of product offer cost. The higher the cost the more the customer is receiving for the product. A great example to illustrate is how ICB Consults goes. This content based site is our free product, it brands us as an expert, and thoughtful resources segue into customers buying or next levels. Next, would be our eBooks that are $10, after that you have coaching at $185 an hour, and then finally consultation at $695. Each level you are getting something different. Once you reach the $185 level you are receiving a more personal experience and the $695 is a totally unique experience for you and your business.

Art of Selling A Lifestyle

Each level of product should evoke emotion from a different target demographic that shops your online boutique. What I could afford in college is drastically different from what I can afford after I graduated college and even now years later is different as well. A college freshman is more likely to purchase the $25 ring versus an account executive who can afford the $250 paved ring. This takes understanding your target and marketing to them on social media, email marketing and more.

These are three simple ways to effectively establish tiered pricing for your online small business. Doing this will help increase your sales if done correctly and consistently. The most important thing is to have the right pricing strategy from the start.

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