Beware! This syndrome is hitting the business world hard and few are able to overcome it. Finding and fixing the right price is a make or break move for your business. Let’s get into it.
“Pricing goods and services is always one of the difficult tasks in business. Varied and complex factors affect the price. One of the common mistakes by owners and managers of small businesses is the failures to get the price right. There are tendencies by SME’s (small to medium enterprise) to fall in the following traps:
Over-pricing – This pricing strategy is more than often over and above the customer’s expectations.
Under-pricing – This pricing strategy is far below customer’s expectations and seems too cheap, which causes the customer to lack trust and value in the brand, products or services.
Many budding business people and other enterprising minds have fallen to the trap of setting the right price for their products or services. You too could end up on the wrong side of this phenomenon, luckily at Fusion Central Marketing, we use Three key pointers from Pricing for Profit:
Useful pricing reminders, to get our clients over the pricing hump!
1. Contrary to popular expectations, there is no set formula for pricing. No two businesses are the same; products are sold in a variety of contexts, therefore, there is no one-way system or formula that would be appropriate in every context. Pricing is a complex, multifaceted and composite of issues which affect and influence setting up the price, therefore it requires a great deal of research, diligence and rationalisation.
2. The ultimate determinant of price is value. Value, like beauty, is in the eyes of the beholder. Value is highly subjective and personal. Remember two points when you price goods and services:
Goods – Overall when considering setting up the price for physical products; focus on compatibility of quality, image and price.
Services – When determining the price for an intangible product or service, consider the compatibility of the service provider’s reputation, customer service and price.
3. If you aspire to be the best and offer premium priced products; beware of the following:
Goods – Your goods must offer the highest quality of material, exceptional workmanship, uniqueness and exclusivity, with excellent aftercare and customer service.
Services – For your service to enjoy premium price you will need to focus on increasing your own value by becoming an authority in your field, making your service the best in your field and focus on delivering the highest result for your customers. When you aim to become a premium priced service; gradually stay away from hourly and daily rates. Hourly and daily rates are for beginner businesses.
Understanding how to set proper prices for your business can determine the future success of your enterprise. It is vital that you look deeper into the value of your products and services, in every move that you make for your business.
We recommend reading Pricing for Profit: Useful pricing reminders by co-founder and Head of Strategic Planning Abdullah Ali Ahmadi.