I talked last time about how variable pricing is a great way to maintain your margins on sale items and I gave three general steps on how to perform variable pricing with email marketing. The gist is that each of your customers has a different value for your products and the key is to figure out how to get them each to pay closer to what they are actually willing to pay. The main takeaway is that you should give different sale discounts to different segments of your customers based on their behavior patterns - and the patterns of other customers like them - concerning discounted items. Today, I’ll take a look at the main arguments that companies have when it concerns variable pricing.
Posts Tagged ‘price discrimination’
The one thing that any consultant will tell you is to start with the notion that profit = revenue - cost, and then go from there. The idea is that profit is the goal and that minimizing cost and/or maximizing revenue is the way to the goal. Typically, a firm must concentrate on one or another at a time to really be effective. What I’ve heard recently, however, with the economy in doubt, is a desperation-type chatter where firms want to concentrate on both at once and be effective at both. Well, the best action that I know that gets close to doing both, is database-based price discrimination.
With the holiday season upon us, and with the specter of economic downturn no longer looming but now in full unfurling, the hue and cry for free shipping to draw customers has never been greater. Almost everyone insists that drastic price cuts and coupon-like free shipping are necessary evils to keep your customers from the competition. But I would urge smaller retailers to resist giving up margin and making deal-seekers of their entire housefile. Instead they should get more personal.