Inexact pricing strategies for your small business are like fish in the water without gills. Your business may be a way of fulfilling your life long dream. As fulfilled as you may be, joy cannot be the only compensation you get for your troubles.
Just like fish swimming with no gills, your business is bound to drown with inaccurate pricing of the product(s)/ services. Here are a few strategies to guide you with the pricing.
1. Identify your costs
First, you need to consider the cost for delivering the product/service. The business should be able to cover its production costs. Having to use personal funds is just unacceptable. You need to cover your life that is separate from the business.
2. What’s the size of your market
Look at your market. How big is it?. The larger your market is, the lower your prices need to be. If your market is smaller and more specific, your price can be higher. This is because you offer something custom made and the clients are willing to pay for it.
Nowadays, being a monopoly is almost unheard of. Even Coca-Cola eventually had to compete with Pepsi. Ensure you identify your real competition. These are companies that offer something similar if not exactly like yours.
You will have to compare your prices with theirs. So that you are not the overly-priced one or, the one who doesn’t charge enough. You could think that it will attract more clients. Instead, they’ll start asking themselves what is not adding up. Why are your prices so low? Maybe you’re lower quality. In the end, you lose clients and a whole lot of money.
3. When did you last change your pricing strategies?
It is very rare for a product to be the same price for years. This is where dynamic pricing comes in. this is technology that tells you when prices need to change. The changes could be due to; competition, season, demand and many other factors.
Finally
In this advanced age of technology, there are software that can help in determining price due to various factors. For example; Dynamic pricing solutions are offered by companies like Wiser. These solutions monitor and analyze trends.
From there, they reprice retail products just in time. Companies such as amazon use this tool. The best part is that it can be automated. For more on benefits of automation, read our article on what business processes can be automated?
Do not allow your business to be a hamster on a wheel. Working so hard but barely breaking even. You deserve to enjoy the fruits of your labor. For more business start-up tips, read our articles on; From an idea to a business. (the in between) and Entrepreneurial hoops and hurdles ways of jumping them.