How much do i sell this?, how much do i charge my clients for this, is this price not too high these are questions most small business owners find very difficult to answer.
But one thing you should know is no matter how low you set your prices some people will still find it to be very expensive so set the price based on value low prices make your goods or services worthless.
The prices you choose to sell your products or services can really have great impact on your profitability.
Tips to setting the right price for you goods and services.
- Pricing should be based on the value to the customer, not the cost to you.
- Pricing should be tangible, so your customers can see what they get for what they pay.
- Prices should be comparable – on terms that you control.
- If you want to change your prices, you must reframe the product or service.
- Prepare your mind to loose some sales to scale profitability.
- Price differentiation is the key enabler of profit.
- Pricing communication shapes the customer’s perception of value.
Some Pricing Strategies You Should Know.
Market penetration pricing.
Penetration pricing strategies can help new start-ups stand out and, as the name suggests, penetrate the market.
Penetration pricing is when a business offers low prices on products and services. It is typically used by new companies or to support a new product launch to draw consumers away from the competition.
While the use of penetration pricing generally results in initial loss of profits for a business, in the long-term the exposure gained can drive profits up.
Premium pricing is when a business sets its prices higher than competitors. For new businesses with an unusual or luxury product or service, premium pricing often works best. The more unique your product is, the more you should aim for a premium price segment.
However, there is a caveat to this.
Widely used by discount retailers and low-cost food suppliers, economy pricing is targeted at price-conscious consumers looking for a ‘no frills’ product or service.
Businesses can minimize the costs of marketing, packaging and production in order to keep prices down.