Once your small business establishes its products and/or services, the next most important step is pricing. Proper pricing can be the difference between a profitable business or one that struggles to survive or even gain ground. Charge too little and chance that your profits will suffer, charge too much and possibly drive potential customers away. So how do you strike a balance and gain confidence in your pricing strategies?
Brad Sugars’ article, “7 Biggest Mistakes In Setting Prices“, offers some good points to consider when you address your prices. One mistake I have personally fallen victim to is #5. Even though I knew my products were better than my competition, I didn’t think potential customers would take that into consideration when purchasing. So I started out by keeping my prices the same as what my competitors charge. With my returning customer’s praise of my products, I soon became confident enough to calculate my own product’s worth.
I think pricing is one of these things that a little experience goes a long way. No matter how many pricing suggestions you read about, it’s hard to go into a startup with enough confidence to get it right from day one. You simply have to live it, to learn it.
I can always relate how shopping centers here priced items – always says something like 199.99 or 195.75.
I have worked as a purchaser and cost analyst, so I recognize the pricing mistakes you could do as a seller. The best thing to strive for is to have an unique product or service that is integrated as a package or set of services that is hard to break apart and compare and contrast with competitors’ offers. If you could show that you are able to add value with your know-how and follow up with after sales service and customer support, you would create a strong situation that is not so price sensitive.
this information applies well for product, but what about the company that is service oriented. I would like to see a list of rules that would apply to determining a price for your service.