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How To Simplify Your Pricing Model

How To Simplify Your Pricing Model

Pricing is dynamic and always changing. It depends on a variety of factors like cost to manufacture, materials, perceived value, profit margins and so much more. That being said, there are ways to simplify your pricing model so that it’s easier to understand and implement. This will introduce a few tips to get your pricing strategy under control.

Understand the Buyer

The very first thing an entrepreneur must do is understand his or her buyer. You need to know what your customer is looking for, what products they want to buy and how they want to buy them. This will help you develop exactly what the customer needs. For example, if your customer would rather buy only online, then you can stop shipping products to physical stores and reduce those prices.

By understanding what they need, you can streamline your whole process. This can reduce costs and make it easier to price accordingly.

Check the Competition

You will always being up against your competition. While some businesses compete solely on price, this isn’t necessarily the best way to go. Pricing lower means that you are more attractive on the price front, but it also means that you make less profits and people may perceive your product as inferior. Not only that, but more established competitors can hold out on negative cash flow longer than you and might price even lower.

Pricing higher can work if you sell better value. You’ll need a product that truly is better. If you can do this and make people perceive your product as the superior one, then you can still make many sales. See what the competition is doing and move accordingly. Keep your prices simple throughout to keep customers happy.

Consider the Customer’s Customer

If you’re in B2B sales, then you need to consider more than just the business buyer. If you only consider the buyer, then you’re not going far enough. You must also consider their customers and what those people are looking for. For example, let’s say the business is inconsistent and has highs and lows throughout the year. If you lock buyers into monthly subscriptions, this won’t help their business and it won’t be useful for their customers.

Make things as simple for the buyer and their customers. This can simplify your pricing while keeping all parties happy. Not only that, but buyers will be much happier working with you since you understand their business.

Dynamic Strategies

Understand how dynamic price strategies work. The market is always changing and your costs will go up and down as will many other factors related to pricing. Keeping all these factors in mind can be difficult and it prevents you from using that mental energy on more useful tasks. Using software that can easily tally all these dynamic factors can help you deliver a simple, consistent price for your customers.

Simplify the Product

This uses the Henry Ford model. Cars at his time were only made for the rich and were quite complex. He decided to simplify the entire market. He used one single design and paid attention to the materials going into the car. He would use valuable materials that decreased price while also positioning the car in a way that everyone understood and benefited from.

This model can be used in any business. Simplify the product, streamline all aspects of it and your pricing model will be much easier.


Pricing can be difficult because so many factors go into it, but this is an essential part of doing business. Using these tips can help improve your pricing strategy so that more people are willing to buy from you.

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