Pricing strategies – step-by-step increase in prices brings more revenue than immediate price increase

So far, retailers had two possibilities when reducing prices: Either the products are offered cheaper for a short amount of time, in order to increase the price again to the (normal) price before. Or the products are advertised with “everyday low prices”.

Studies (Michael Tsoiros, University of Miami, ALBA Graduate Business School and David M. Hardesty, University of Kentucky in the Journal of Marketing) show that there is a third possibility that is even more effective.

A store can create more revenue with a price promotion, by increasing the prices step-by-step after a price reduction – instead of offering the product for the original price again.

Customers expect a higher price in future and therefore buy (inaction regret).

You should therefore think twice about setting your prices and also work out a good pricing strategy. However, this strategy should also fit into your marketing or business plan.

How to become self-employed and start your own business

You have been thinking about becoming your own employer? Then you should definitely ask yourself the following questions:

• Are you an entrepreneur?
• Are you qualified to run your own business?
• Do you have experience in the industry?
• Do you have basic commercial/business knowledge?
• What does your family think about your plans?
• Will you withstand the stress of being an entrepreneur (psychologically, as well as financially)?

Before you dive right into starting a business, you should visit a seminar for entrepreneurs. Often, the local Chamber of Commerce offers these workshops. Also, check whether the university in your city offers anything for entrepreneurs.

If you really decide to pursue your entrepreneurial zest for action and actually realize your idea, then you will need a business plan.

However, before you get started on it, you need an idea for your business: What do you want to sell – a product or a service? Maybe there is something special, the competition does not offer yet?

Now you can go on to explain your project in a business plan:

• You should present yourself as a founder and also your co-founder if you have one.
• It is also important to choose which legal form you want for our new business.
• Describe your product/service, your customers, your competitors, your location, and your suppliers.
• Also mention your human resource planning.
• Briefly explain your pricing strategy.
• Describe your distribution strategy.
• Your communication and promotional activities you can mention briefly or you can write a detailed marketing plan.
• Mention opportunities and risks of your start-up.
• Clarify the required capital and where it will come from.

Once your business plan is ready, you can start seeking a way of financing. You probably thought about this before. You should now make a detailed calculation on the capital needed. Make a detailed list of all expenses planned.
Do you already have enough money to finance your business? Are there any friends or relatives who would lend you money for your project? What about credit institutions or governmental funding programs?

Remember that starting a business there are many formalities you need to take care of, such as governmental approvals or permits. Also with the tax authorities you will have to arrange. Try to clarify the requirements with the help of the authorities in the location you want to set up your business in advance.

More information on the topic of becoming an entrepreneur, start-ups, self-employment and starting your own business can be found on the following websites:

• U.S. government www.business.gov
• U.S. Small Business Administration: www.sba.gov
• The magazine "Entrepreneur": www.entrepreneur.com
• Business Link - the official government website for businesses of all size: www.businesslink.gov.uk