nurturing small businesses

Are you pricing your products or services correctly?

Posted by on Jun 17, 2012 in Blog | 0 comments

The worry of not pricing business products or services correctly is a common theme amongst those The Business Greenhouse meets.  The topic cropped up again in a discussion in an online networking group this week, so we thought we’d share our hints and tips on how to charge what your product or service is worth.

 

1.  Be confident

Remember this is your business and you are the expert in the products or services that you offer.  Don’t doubt yourself or your abilities, otherwise your clients may sense an opportunity to negotiate your prices or opt to go with a competitor.

 

2.  Value the value you offer your customer

Take the time to understand what your customers need from you, and look at how you meet these needs and what else your customers or clients gain.  Place a value on the level of service you provide and the benefits you and/or your products provide.

 

3.  Be realistic

What does it really cost you to deliver your product or service in time, resources, overheads, expenses, tax and so on?  Have you factored everything in?  Look at what you were paid for projects you’ve completed in the past and calculate what you actually earnt compared to what it cost you to deliver – many people are surprised at how little they got for their efforts!

 

Don’t forget that you are most likely to want to make some money so also include a realistic profit margin!

 

4.  What do your competitors charge?

Look at what you offer compared to that of your competitors.  How is your service or product similar or different?  What value do you add in comparison?  Is your target market different?  This information can be used as a guide to help you confirm what price you should charge.

 

5.  Don’t offer a discount

The fear that your prices are too high can often tempt some to offer a discount.  STOP!  Unless you’re giving a discount on a value-added item at the same time as making this sale (i.e. to encourage your customer to buy an additional service or product), seriously reconsider.  You don’t have to apologise for the price you charge, nor should you be afraid of what you’re charging.  Remember, confidence!

 

6.  Go with your gut

This might not be the most scientific of approaches, but what price feels right?  The balance of your experience, the manner in which you engage and interact with your customers, and the way in which you deliver your service or product are intangible to a point.  Factor this in alongside the tips made above and play with the figures until you’re happy.

 

Have you got any more hints and tips?  What’s worked for you?  Do leave a comment below and let us know.

Otherwise do feel free to drop us a line here at The Business Greenhouse if you want to pick our brains further, or if there’s any other way you feel we can help your business.

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