PRICING STRATEGIES || HOW TO SET PRICING FOR YOUR PRODUCTS AND SERVICES || SERIES 1
Choosing an effective pricing strategy is essential for continued sales in your business.
There are several options to choose from when it comes to developing a pricing strategy. Choosing the correct strategy is essential to your business's success.
You should set your price higher than the actual cost of manufacturing or acquiring it order to make profit.
However, your prices are more than just numbers. It is a reflection of your business's identity, how you view and treat your competitors and how you value your customers. That's the reason it's important to choose a thought out pricing strategy.
Factors to Consider When Setting Your Pricing Strategies
When deciding the price for your products or services, don't focus entirely on profit. It should be based on a calculated, informed decision in which your business identity, brand and financial stability are considered.
As with other business decision, determining your pricing strategy starts with assessing your own business’s needs and goals. That's, what is your business's mission?
Some businesses are out there to contribute to the economy and world? This could mean embracing a traditional retail strategy, establishing a service business mindset or emphasizing personal customer relationships in their offering.
After defining your business goals and needs, do some research on the market you’re entering. You may determine three or five main competitors in the industry by conducting online research or searching out local businesses. Remember, no matter what pricing strategy you adopt, what your competitors are doing will impact your business’s success and future decisions.
So understanding your competitors’ strategies can also help you differentiate your business from other businesses in the market. In an environment where there are thousands of small businesses providing the same products and services, an effective pricing strategy can help you stand out.
One good way to get information in your research is speaking with potential customers to get a feel for how they value your brand, product or service. This will give you valuable insight on how to set your pricing.
This kind of research is not hard, it can range from casual conversations with friends and family to formal surveys of potential buyers.
Next will be to choose from different pricing strategies available for you. I will discuss these in the series 2.