Top 5 Pricing Trends for the Holiday Season

By Rafi Mohammed Features FOXBusiness

With the holiday season upon us, many retailers are wondering what pricing strategies they should implement to price for profit and growth.

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This year, more than ever, the U.S. is a “have” and “have not” economy. On the negative side, consumer sentiment remains low and the unemployment rate continues to sit at 9.6%. However, there is positive news: Personal expenditures were up by 2.6% in the third quarter, the Dow Jones Index is over 11000, corporate profits are on the upswing and unemployment has stabilized (albeit at an unacceptably high level).


Bottom Line: A new opportunity exists this holiday season to serve cautiously confident consumers who, due to pent up demand and an interest in treating themselves, are willing to open their wallets.


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Trend 1: Tailor your pricing strategy to your customer:


•In economically-depressed areas, continue the status quo pricing strategy of recent holiday seasons: focus on staple products, offer financing and layaway plans.

•In cautiously-confident markets, there is an opportunity to sell higher margin luxury products and services.


Trend 2: Show customers why they should purchase your product:

•In previous holiday seasons, price was the key driver of sales. This holiday season, cautiously-confident customers are willing to pay a premium for unique features (for instance, ads for Apple’s MacBook Air highlight its thinness).


Trend 3: Feature upscale “reach” products to cautiously-confident consumers:

•While the basic version of an upscale product may be discounted to attract consumers, reap higher profits by offering upgrades as well as complementary products.


Trend 4: Welcome cautiously-confident consumers back with new pricing plans:

•Offer generous financing and layaway plans.

•Minimize risk with “satisfaction guaranteed” pledges.

•Offer lower cost options such as “basic” versions, rentals, and leases. 


Trend 5: Offer experiences to cautiously-confident consumers.

•After years of pinching pennies, consumers are willing to splurge on fun experiences.





Rafi Mohammed, Ph.D. is the author of the  pricing strategy book, The 1% Windfall: How Successful Companies Use Price to Profit and Grow (HarperBusiness).


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