There are many strange anomalies in the business world, areas and attitudes which are very common, but sometimes difficult to understand. The area of product or service pricing is something which can be very difficult to understand , and an area where common sense often goes out of the window. So what is the best pricing policy?

On the surface it should really be supply and demand, although unfortunately it is not always that straight forward. How many times have you been shopping and seen something you like for a ridiculously low price? There are many of us who would just buy and move on, but there are a lot of people who would think, “Hmmm, that is too cheap but why? There must be something wrong with it” and then walk to the next shop, where the same item may be substantially more expensive, but you think “This is the one for me”.

Human nature is a very strange thing to understand, we all want the best bargains that we can get, but sometimes we back out if we think something is too cheap. For some reason there are many of us who find comfort in the fact that an item is reasonably priced, therefore it must be better than that one which was ridiculously low priced. Be honest, have you ever done or thought that?

Finding a balance between cheapening your service / products and offering the comfort that something higher priced must be better, is a very difficult area for some businesses. However, remember it is much easier to move a price down that put one up. Start high and work your way down until supply actually meets demand - but don’t give it away!