Ah the allure of starting your own business usually means being your own boss, setting your own hours, waking up when you want to, blah, blah, blah, but one of the best perks of being a business owner is MONEY!! Yep the almighty dollar. We want to make money, yes our passion is a driving factor but the reward of MONEY will definitely drive many of us to propel our business. However as much as we want money some of us aren't quite sure how to make it. Basically some of us are not sure on how to make a profit and what it takes to charge our clients while remaining competitive.
When it comes to business, pricing is everything. You can have a fantastic business model, a great website, a niche market everything and anything that can help your business succeed, however none of that will matter if you're not savvy at how you should be selling/pricing your products and or services. Unfortunately there isn't a concrete formula on how you should be pricing your goods, however there are some suggestions that perhaps can lead you in a suitable direction.
1) Production Pricing - Don't just look at what it cost to produce a product but also consider the behind scenes that comes with this product. For example, operational expenses, the time you took to create the product, how much should you pay yourself for creating the product, licenses, taxes. All these items should be taken into consideration when pricing your product, don't rely on the typical 20% overhead as your pricing, you may have more or less to consider. You want to be fair to your customers but you also want to be fair to yourself!
2) How Low Can You Go? - This where researching your competitors comes in, whatever you do try to stay on par with your industry. Our instinct tells us to compete with money we should go lower to get the business. However there are some drawbacks in doing this: 1) You can cheapen your industry, which wouldn't be fair for anyone and 2) Some clients may believe if you're charging too cheap you may not have much to offer. Think of this way, would you rather shop at Marshall's or Neiman Marcus? The other issue with going too low is your customers become accustomed to low prices and in the event that you have to raise prices they may view it as an insult and go elsewhere.
3) Rely On Your Service - These days with automatic everything from customer reps to tellers, putting a price on service is hard but it can be done. You may not have the best product in the world, let's face it you're a small business, competing with Wal Mart wouldn't make any sense. Yet you can still compete by offering niche services, being attentive and keeping your customers informed, essentially service the heck out of whatever you do. You'll find that in this penny pinching economy service is one commodity that is still valued and is actually top dollar!
For more tips on pricing check out this article and video from the Wall
Street Journal which offers some real life mistakes/perspectives on pricing.
Note: QC Hustle does not endorse or advertise any products mentioned in this article. Article is solely for informational purposes.
Wishing you Prosperity,