Six Pricing Strategies For Dry Cleaning Services

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Pricing Strategies

Pricing. It’s among the secrets to business success. Pricing your services correctly boosts sales, maximizes profits, and sets a solid foundation for business growth.

Pricing your services incorrectly, however, creates challenging business problems—the kind that dooms your business to fail. Obviously, you need to get the pricing right.

But getting the pricing right is easier said than done. Pricing is both an art and science—one that involves many factors. That makes pricing a challenge for many retailers.

The key is finding a pricing strategy that’s right for you. Fortunately, you have a  lot of flexibility when deciding your pricing.

Pitfalls to Avoid When Setting Prices

The flexibility you have in setting prices, however, doesn’t eliminate the risk involved in doing so. You face two key risks when determining a pricing: underpricing and over pricing.

·         Underpricing

Some companies set prices low hoping to drive sales. Underpricing your services can backfire on you big time. Consumers often consider these services as cheap or undervalued, which can damage your brand’s reputation.

Instead, you want to set your prices, so consumers feel they’re getting their “money’s worth.” Plus, you need to set your prices so that you cover all the costs involved in providing the service.

·         Overpricing

Other businesses overprice their services to maximize profits. This approach can be just as bad as underpricing. Remember, consumers are comparing your prices with your competitors’ pricing all the time.

If they feel they’re getting more for their money from a competitor at a lower price or the same price, they’ll buy your competitors’ services, not yours.

Also, you want consumers to feel that your pricing is fair. So take time to survey consumers about your pricing to see just how your current pricing stacks up.

Six Commonly Used Pricing Strategies

The first thing you need to do to avoid these two pitfalls described above is to study the common price strategies the retail industry uses. You have two basic approaches: Cost plus pricing or value-based, where you set a price based on how customers value your services.

We describe six common pricing strategies below:  

Keystone pricing

Popular with both retailers and eCommerce peoples, this strategy doubles a service’s wholesale costs. The strategy works well, but you need to make sure you cover your operating costs. Some companies use the initial price as a base, then apply markups/discounts.

MRSP

Manufacturer’s suggested retail price is another pricing strategy popular with both retailers and eCommerce people. The manufacturer sets the price, and that’s how you price your product or service. This approach is often based on Keystone pricing.

Psychological pricing

Research shows that people feel some pain when they spend money. This pricing strategy helps alleviate that pain. Pricing something $3.95 instead of $4.00 is an example. Whatever pricing approach you select, apply psychological pricing.

Discount pricing

Businesses using this approach often sell services below competitors’ prices. For smaller retailers, however, this pricing strategy leaves razor-thin profit margins, so it’s risky. Special markdowns, seasonal specials, and coupons all help lower prices for consumers.

Loss-leader pricing

This pricing strategy draws buyers into the storefront so they can buy more profitable products. Retailers set the price for a popular or much-needed product at cost or even below cost. Loss-leader pricing is another dicey pricing strategy that’s risky. Your profits on other items must cover your lost-leader costs.

Cost-plus pricing

This strategy is the simplest of the six strategies. You apply a markup percentage, say 20%, to the cost of producing the service. Make sure you add all your expenses to the costs before applying the markup, including indirect ones.

Many dry-cleaners use a mix of these pricing strategies to generate traffic at their storefronts, encourage additional sales, and/or generate profits.

Optimum Pricing Maximizes Profits

Ideally, you want to set the “optimum price” for your services. That’s where you set a price that factors in all your costs and maximizes profits, yet still is attractive to consumers.

Below is a six-step process to find the optimum pricing for your dry-cleaning services:

  1. Determine competitors’ prices. Also, how much consumers will pay.
  2. Choose which pricing approach suits you—cost-plus pricing or value-based.
  3. Consider cost-plus pricing. Use industry knowledge to set markup percentage
  4. Set value-based pricing based on the market value of service or services
  5. Calculate different prices for different services using the approach you think best.
  6. Keep an eye on what’s happening. Prices seldom stay fixed. Make adjustments, if necessary.

This six-step process helps you set the optimal price for your dry-cleaning services. Also, talk to customers to make sure your price or prices remain optimal.

Optimal pricing maximizes profits for your business and provides a solid foundation for growing your business.


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