Things to Think about when Setting your Price

When making purchasing decisions, everybody is interested in price. Obviously, it is a major factor in determining whether a sale takes place. What is less obvious, however, is that not all consumers or clients are looking for the lowest possible price every time. Businesses that always aim to be the cheapest option are not doing themselves any favours. While earning the dubious honour of ‘cheapest’, they are losing revenue, and probably customers as well.

People will pay more for quality

As much as everyone likes a bargain or a good deal, it is fairly universally understood that you get what you pay for. Setting prices unrealistically low in order to compete with larger operations is also indicating that your product is somehow worth less than theirs. This is probably the opposite of the message you really want to put out there. By setting price a little higher, you indicate your product or service is superior in some way. Countless customer surveys have proven a higher price tag shifts the perception of quality, even when the items presented are identical.

A narrower market means more effective marketing

If you worry that raising prices will mean you are making yourself less available to a certain market, it might not be an altogether bad thing. You will find your marketing efforts are more effective if they are aimed at a more specific market. By raising your game out of the reach of some, you will be better able to provide services to those who can pay for the extra care.

Higher prices allow for higher quality

If you are accepting low rates from clients, you are likely cutting corners left and right. Eventually, your reputation will reflect the customer’s experience of you as a ‘budget’ option. By charging a little more, you can ensure that you can maintain the quality of what you are offering, and over time be able to raise it. The better materials you can source and the more well trained staff you can employ are going to lead to higher customer satisfaction, and a more successful business overall.

Think pricing and sustainability

If you are relying on lower prices to pull clients into the business, that might work for you in the short term. It’s nice to see the coffers being filled. But what happens in a month – 12 months’ time? How long can you afford to work for the same low prices? What impact is it having on your business profitability? How sustainable is your business? If you start with low prices, you have nowhere left to go but out of business. Think long term and price your services at what they are worth.

Correct pricing is crucial in managing a successful business, so don’t be tempted to sell yourself short.

 

Written by

Leave a Reply