Launching a new business in Africa comes with its challenges. A lot of factors such as cost of production, market share, brand image play a vital role in generating revenue. A great pricing strategy can go a long way in helping new businesses recoup costs and make profits.
Market Penetration Pricing
Penetration strategies are designed to entice customers by lowering the cost of goods and services. While many new businesses employ this strategy to divert attention away from their competitors, penetration pricing usually results in an initial loss of revenue for a business.
However, increased awareness can boost revenues and help new businesses make huge profits. It’s part of the market penetration strategy to raise the prices for your products or services as your brand gains the required traction in the market.
Pricing at a Premium
This pricing strategy entails setting high prices in the early stage of the business. This way your prices are higher than the competitors. This creates the sense that your product or service is of a higher value. It’s a perfect pricing strategy for new businesses.
Customers must believe that items are worth the higher price tag, thus you must put the work to establish a value perception. you must also ensure that your marketing campaign, product packaging, and shop design all work together to support the premium pricing.
Price skimming is a strategy used to increase the sales of new products and services by setting high prices in the initial phase. As new competitors enter the market, the firm progressively reduces pricing.
It is great for launching highly unique products or services. Price skimming not only helps a new firm recoup its development expenditures but also gives the impression of quality and exclusivity.