One of the secrets to ensuring your business’ success is pricing. Price your products or services correctly and your business has a higher chance of living. Do otherwise, and it could lead to the death of your business.
While there are a variety of pricing strategies business owners can use, there’s no sure-fire, formula-based solution that solves the problem like magic that can be adapted to all types of products, businesses, or markets.
Before you price your products, you have to consider certain major variables such as identifying and understanding your target audience, their lifestyle and spending habits, competitors’ rates, and understanding the relationship between quality and price.
The good news is that you have the flexibility in how you set your prices. However, that’s also the bad news. The first step to get your pricing strategy right is to learn how to meet your business goals. And how do you achieve that? You have to understand and be clear about why you are in business: Get Clear about Making Money.
The biggest mistake many business owners make is the belief that sales are solely determined by the price. And that’s wrong! What determines or drives sales is your ability to sell your product or service. And that means hiring the right people to market your product and adopting the right sales strategy.
Pricing your products too low can hurt your business’ bottom line; even though this is the most popular pricing method adopted by most businesses. Many businesses believe that under-pricing their products or services convince their customer that their product is the least expensive one in the marketplace.
Additionally, you should re-evaluate your costs consistently. To sell it right, you have to buy it right. If you are having a hard time selling a product at an acceptable profit, the problem may be that you are not buying the product right. It may be that your cost is too high rather than your price being too low.
Remember that you owe it to yourself and to your business to get your product pricing right. Do it well, and your business would succeed. You do it wrong and it might lead to the failure of your business.
