Pricing your private label supplements is one of the key complementing elements to good branding. Just like branding, pricing should be tailored to your target audience. Buyers often use the price to perceive value when all other factors are equal. Your pricing strategy should be defined by your audience insight and rival behavior. Knowing the type of audience you are reaching with your brand will be the key to understanding how you can price your product to meet their expectations.
You should gain insight into the pricing of your niche and decide where in the category you want to stand. It is useful to perform price gap analysis in order to optimize your price and sales with regard to your competitors. Using innovative approaches to find the right balance between value and price is vital. The key to successful pricing is diligent data collection and analysis.
The Secret is Research
The first step to optimum pricing and performance of your private label products is gathering data. Your cost is, for the most part, fixed so your research should focus on digging into the overall pricing of your category both on national brands and other private labels. If you have a range of products in different categories it might be worth to use a classification algorithm.
This is essentially a tool that scans the Internet for products in your category employing different parameters such as title, description, color, size etc. Automated research is precise and saves time so you can make swift adjustments, especially if you are marketing a wide range of products. Gathering as much reference points as possible helps you optimize your pricing strategy.
Your strategy depends on your place within the category and your branding. Generally, private label products are priced below national brands because they lack the brand value of household names. People buy them because they are cheaper especially in times of economic distress. So keeping prices below known brands is often a good general strategy.
Use Perceived Value and Price Gap Analysis
Perceived value grows with your diligent branding, marketing, and consistent delivery on your promises. Your price has to be consistent with the value you deliver for sustainable sales growth. That is why if you are offering generic and luxury products it is best to separate them in different brands so you can clearly link their individual values to their prices.
You should measure your product’s’ perceived value and price against that of your rivals to optimize pricing. That means performing price gap analysis to see where your brand is standing. If your perceived value is far apart from your competitors’, price completion will hardly gain you any market share. You are better off using internal indicators to adjust your strategy.
Find What Works for Your Brand
Your goal is to find the right formula that works for your products. One way is to price slightly above the traditional markup and just below your competitors. Another way is to offer three prices – low, medium and luxury – then use the choice to give your buyers a recommendation. With these techniques, you should gather sales metrics so you can find optimum ground.
A third approach is to charge according to your branding with little regard for your competition. This can work if you are absolutely precise with both – branding and pricing – so some testing may be required. If you are in the luxury market you should stand 100% behind your brand and show it by pricing it above other luxury brands. That way you are showing that you truly believe yours is the best product.
Consider Your Product’s Features
The complexity of your product and your audience’s ability to perceive and compare its features also plays a vital role. If your product’s features are easy to compare and you are positioned as a value brand, regulating your pricing with your competitors in mind is crucial. If you are in the luxury niche and components are hard to compare you have more pricing freedom.
If feature comparison is not easy you can price according to popularity, factoring internal indicators like orders, customer reviews, ratings, and conversions. You can fine-tune your price using these indicators when your perceived value is relatively independent of your rivals. If your product is popular but conversion rates are low you can employ discounting until optimum levels of conversion are met.
Pricing your private label products takes diligent data gathering and careful consideration of internal and external factors. Your optimum price will be affected from your market ambitions including target audience, brand image and marketing spending. It is also essential to consider transparency, value proposition, and rivals in order to arrive at a winning formula.