Pricing: What Yours Should Do

One of the questions I’m often asked is ‘how much should I charge for a product or service’. This is typically the starting point for most discussions on pricing. But the question you should be asking is ‘How much do customers value the products, services or other intangibles I provide’.

There is no right or wrong when it comes to pricing – but your profit margins will ultimately reflect the pricing strategy you choose. So it ultimately depends on your goals and objectives.

Here’s three things YOUR pricing should do:

1. Achieve your financial goals and profit objectives. The key here is to have objectives and know your true costs.
2. Fit the realities of the market place. Will customers buy at that price based on value and competition?
3. Support your positioning and other elements of your marketing, such as distribution channels, promotions, and product uniqueness.

The first two are obvious and most small businesses incorporate these into their pricing decisions. But often they overlook the third one. In doing so, they often lose profit and sales.

So as you set or change your prices, make sure you consider all three elements. To learn more about pricing strategies and the best ways to maximize your profit, visit my article library.  

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