For something that at first glance seems to straightforward, pricing can be unbelievably tricky. You want your price to reflect the quality of your service or product, because if it is too low, people might assume you are not that good, but if it is too high you won’t attract customers and they will go elsewhere, but if it is too low and you do get customers then you won’t make a profit, but if it is too high, you won’t get any customers anyway… and so on and so forth.
Phew, it’s a minefield! Getting pricing right is crucial to your business model, but it needn’t be that hard.
Let’s start with the basics:
Check out the competition
1. First of all you do need to look at what you competition is charging and exactly what their customers are getting for their money. Find out what their USP, or Unique Selling Point, is, or in other words, the added value that customers get from buying their product or service. Compare it with yours. [N.B. If you haven’t worked out what your USP is yet, you might need to go back to your business plan – you do have a business plan don’t you…? Ok well that’s a whole other blog!]
How much do your customers want to pay?
2. Find out as much as you can about your potential/existing customers and what they are willing to pay for a service like yours. They might be paying a certain amount for a service like yours, but with the added value of X, they might be willing to pay more.
What are your own costs?
3. Scrutinize your overheads. You need to be sure your price takes in to account each stage of the production/service delivery process. It is very easy to forget that answering phone calls, emails, having meetings and travelling to and from those meetings, costs you time and therefore money.
Pricing is one of the most important elements of your business so take your time to get it right. You’ll be so glad you did.
If you need some help with pricing and don't know where to start, click here to book a free 30 minute consultation.