Pricing your products can be a tricky thing to do. At least efficiently. When it comes to successful product pricing, there are many factors that come into play. Asides from having decent profit margins for your company, you need to position your products in a way that allows them to compete in the market. That’s where key basket in pricing truly shines.
This pricing technique creates a “basket” of product that would act as a compass when pricing your products. Whenever you’re pricing a product, the basket of existing products that you’ve created will help you know where you stand from a customer’s perspective.
In addition to helping you meet your clients’ expectations, this technique helps you make sure that your products are competitive with what already exists in your market. If you’re serious about your products achieve their intended goals, this is a pricing technique that can help.
Key basket pricing is one of these pricing techniques that are deceptively simple. With multiple products in every basket that are constantly changing, staying on top of things takes lots of effort.
The following the key points that you need to consider when using the key basket in pricing technique. Being aware of these factors will help you make the most out of key basket pricing and price your products as efficiently as possible.
Monitoring the Right Products
A compass can only help find your way if it’s working properly. The same thing applies to the key basket pricing technique. If your key basket products are chosen properly, you’ll have a clear guide to pricing your products efficiently. If the products in your key basket aren’t an accurate representation of your market, they’ll end up doing the complete opposite.
The one thing that’s worse than not having a clear guide for pricing your products is having a bad guide. To make the most out of key basket pricing, you must choose the products groups carefully. Choosing products that are like yours will help you avoid a skewed perspective of the market norms.
A product might look like yours but after further inspection, you might find out that it’s a much more luxurious version that’s targeting a completely different user group. Having such irrelevant products in your basket is something that you should aware of.
Tracking Changes Constantly
Market prices are constantly changing. If you plan on using the key pricing technique to price your products once and for all, you’ll find out that these prices will soon become irrelevant. The true potential of key basket pricing is not in pricing products for the first time, it’s in being a great way to track market changes.
Tracking the prices changes of the key market products in your basket will help you adjust your prices whenever the market norms change. By doing so, your offering will stay relevant and efficient no matter how the market changes.
When you have different baskets for different products, tracking them all is lots of work. Using the full potential of this pricing technique is the best way to make sure that these efforts are worth it.
Advantages and Disadvantages
Like any other pricing technique, key basket pricing has its own pros and cons. Deciding whether this technique is right for a business depends on whether the pros outweigh the cons for that business. Down below I’ll list couple of the major advantages and disadvantages that are associated with this pricing technique.
Dynamic Way to Track Market Changes
Key basket pricing is a great way to track market changes. Using the right tool, you’ll be able to constantly track where you stand compared to your competitors. Unlike most other pricing techniques, key basket pricing can help you keep up with an ever-changing market.
If you’re in a market with frequent price changes, this is a great way to keep up.
Hard to Scale Without the Proper Tools
The major disadvantage of using the key basket pricing technique is the fact that it can be hard to scale without the right tools. If you have multiple products and different key baskets, tracking everything can be a headache.
Deciding whether this technique is right for your business is something that only you can decide. If you’re in a market with constant changes then using this technique for all your products is an initial effort that’ll pay off. Before you commit to using this technique, make sure it’s the right choice for your business.
How can Sniffie help?
Using the key basket pricing technique can help you set prices for your product that are competitive with the existing market offering. For this technique to work, you must be aware of the key products in your market as well as their retail prices.
If you’re selling many products, there is a lot of work that needs to be done. Instead of doing this the old way, you can use Sniffie to get better and more accurate results faster.
How to use key basket in pricing
- Select items that are similar to the product you’re selling.
- Know the prices of these items.
- Know the high, low and average prices from the customers’
- Price your product accordingly.
- Used to represent and monitor price changes for a specific product.
- Make sure the products you choose are directly comparable to your product.
- Choose products that consumers are already using to evaluate other products.
- Have an in-depth understanding of why the products you choose are being sold for these prices.
- Take the way customers perceive your product into consideration before setting your price.