Building Brand Equity: 5 Practical Steps to Enhance Your Pricing Strategies for Small Businesses.

In today's competitive marketplace, small business owners need to strategically leverage their brand equity to optimise their pricing strategies.

So what is brand equity?

It simply means a brand that can generate more revenue for being well known!

It’s why we may pay more for a well known sneaker, like Nike, over a shoe from a lesser known brand.

So by aligning brand perception with pricing, businesses can establish themselves as trusted and valuable options for their customers or clients.

OK, let’s explore five practical actions that small business owners can take to enhance their pricing strategies through brand building.

But firstly, take time to understand the key elements of brand equity:

To effectively price your products or services, it's crucial to understand and articulate your unique value proposition.

Identify the specific benefits and advantages your business offers to customers that set you apart from competitors.

Whether it's superior quality, exceptional customer service, or innovative features, clearly communicate your unique selling points to customers.

This will help you build a strong brand identity that helps justify higher pricing.

If you don’t have any, then unfortunately you will be known as a commodity with absolutely no leverage - so change is required.

Invest time and resources in market research to gain valuable insights into customer preferences, needs and purchasing behaviour.

Analyse your target market to understand their perception of your brand, as well as their price sensitivity.

You can use tools like Facebook and start snooping, or design a survey and ask your customers.

Evaluate your competitors' pricing strategies by stalking their websites and identify any gaps or opportunities.

This information will enable you to align your pricing strategy with your target market's expectations, ensuring your prices are competitive yet reflective of your brand's value.

Consistent and compelling brand communication is essential to build brand equity.

Ensure your brand messaging, including your website, social media profiles, and marketing materials, clearly conveys the value your business offers.

Craft customer stories that resonate with your target audience.

Highlight the unique aspects of your products or services that justify the prices you set.

Communicating your brand's story and the underlying reasons for your pricing strategy is to ultimately build trust and loyalty with customers.

Positive customer testimonials and reviews can significantly influence brand perception and pricing decisions.

Encourage satisfied customers to share their experiences and feedback through Google reviews, testimonials or case studies.

Display these social proof elements prominently on your website and other marketing channels.

By showcasing the positive experiences of previous customers, you can enhance your brand's credibility, reinforce the value of your offerings, and again justify your pricing structure.

Pricing strategies should never be static.

Regularly monitor market dynamics or the change in the environment or community you operate in, customer feedback, and industry trends to ensure your pricing remains competitive and aligned with your brand positioning.

Keep a close eye on changes in customer preferences, competitors' pricing adjustments and shifts in the overall market landscape.

Be willing to adapt your pricing strategy when necessary to maintain a strong brand perception and sustain profitability.

Pricing strategies and brand equity are intricately linked, and small business owners can enhance their pricing strategies by focusing on brand building.

It may feel a little overwhelming, especially if you don’t have a person or team to help you!

However, you can make a start by documenting where you need to fill in the gaps and asking for help.

And following these five practical actions:

Remember, building brand equity takes time and effort, but the benefits are invaluable - leading to increased customer loyalty, higher perceived value, and ultimately, business growth and success.

Ian Whitworth in podcast episode 374 emphasises the significance of branding for small business owners in relation to pricing and profitability.

Ian advises that without a strong brand, many entrepreneurs feel compelled to compete solely on price, potentially jeopardising their profitability.

However, a well-established brand allows businesses to differentiate themselves and avoid being solely reliant on offering the lowest prices, provided they have sufficient profit margins.

Ian says "That brand is incredibly important. If you want to be profitable, most small business people are doomed forever to feel they have to be the cheapest of six quotes. Whereas with a brand, you don't have to be unless you've got margin."

“So great brands, profitable brands are built on just being consistent”

This emphasises the importance of branding in breaking free from the cycle of competing solely on price.

It highlights that small business owners who lack a strong brand often feel pressured to offer the lowest prices to attract customers.

However, with a well-built brand and a focus on creating value, businesses can avoid price-based competition and instead focus on differentiation, customer loyalty and profitability.

Action for Small Business Owners: One action as a small business owner you can take today is to evaluate your brand positioning and value proposition.

Assess how effectively your brand communicates value to your target audience and whether it differentiates you from competitors.

By identifying unique selling points and developing your own brand story, you can start building a brand that allows you to command higher prices based on perceived value, rather than solely relying on being the cheapest option, which is a downward spiral.

Are you looking for more support for your business growth journey? Our Business Transformation Program provides expert content in three courses, weekly one-on-one coaching and accountability and ongoing networking.

Join our Business Transformation Program waitlist now.