What is the best way to price a product or service? What are the things you have to keep in mind? Most business owners who are not quite sure what to do will simply use their competitor’s price and the price below or above it. The question to ask then is, how would you know your pricing strategy is correct?
Let’s look at the factors you need to consider when pricing. First, you need to determine your pricing goals. It basically defines what we want to achieve. There are 3 price targets to consider.
1. Income-oriented pricing
It is setting a price that will maximize the revenue of the target market. For example, if your daycare offers something that other daycares can’t, like a particular curriculum, then you might want to consider this goal.
2. Operations-oriented pricing
It seeks to balance supply and demand. Introduce cheaper prices during calm periods (or when demand is low) and increase prices during peak periods (when demand is higher). For example, during the holiday season when parents don’t send their children, you can offer short courses/electives.
3. Target market prices
Use different prices for different target markets. For example, you can offer parents who host more than one child in your daycare center a discount from parents who only host one child in your center.
Next, you need to think about the pricing strategy you intend to adopt. The pricing strategy defines how you are going to achieve your goal. There are 3 different strategies you can adopt.
has. market scheme
Do you think your day center or its services generate added value? Do you think your customers will be able to afford it? Are you the only or select nursery that offers it? If your answer is yes, then you can consider skimming the market. It’s basically about charging the highest price possible. You will need to decide if what you are offering is something that the customer values. For example, you are offering a particular curriculum that other day care centers do not offer, and you believe that this value-added curriculum is something that your customer will be willing to pay for. Or your center is the only center in town that closes at 8pm and it’s something you think your customer values and is willing to pay for. Charging a higher price will also mean that you have to communicate this to your potential customer through effective promotional means.
b. market penetration
If there are multiple daycare centers and they all offer essentially the same curriculum or services, then you should consider penetration pricing. It basically means keeping the price low to gain more market share.
against price adjustment
The last and most complicated strategy is price adaptation. You are offering different prices to different target markets. For example, parents who place 2 or more children in their daycare are offered a discount. But what happens when one of the siblings reaches school age? It can be difficult to return to the highest price.
Pricing strategies are something that plagues many business owners. While lower prices may mean greater chances of increasing recruitment, low prices may mean you have to cut back on some luxuries, like quality meals or a curriculum, which could hurt your daycare’s image. Therefore, it is important to think very carefully before setting a price because, in most cases, it will be difficult to reverse that decision.