Pricing products and services is one of the trickiest tasks tied to running a business. It’s a balancing act that requires choosing a price that works for both you and your customers.
So what makes a price right?
Many factors contribute to the pricing process but ultimately, a successful pricing structure is one that reflects the benefits of your services, is competitive, covers your business costs, and is on budget for your key demographic.
That’s a lot of contributing factors, but one resource will quickly tell you if your pricing is reasonable: your customers. The following scenarios can help you determine the accuracy of your pricing based on your customers’ willingness to pull out their wallets:
That’s a NO.
Let’s say you’re negotiating with a potential customer, but after you share your minimum price with them, they turn you down immediately – leaving you high and dry. This scenario is all too familiar and doesn’t feel good. But it gives you a list of questions to consider:
- Did you present your product’s benefits so its value was clear to your prospect?
- Are there ways to cut your costs so you can pass the lower price on to your customers?
- Are you marketing your product to the right audience?
It takes research and time to narrow down your pricing mistakes, but when you do, you’ll be on your way to a thriving, lucrative business.
Yes, Yes, YES!
In this scenario, you wish you’d negotiated better. You offer your prospect a price and before you blink, their credit card is in your hand. That’s when you know you should’ve charged more. It’s obvious the customer knows they got a steal, but what did you lose? That’s what you need to find out.
When you’ve given away too much value for too little money, it’s time to re-evaluate your costs and dissect your competitors’ pricing. Do your competitors offer better customer service or options that add more value to their products? Do your research to discover a better pricing balance.
Let me think about it… Yes!
The deliberation might kill you (not really), but it’s worth every bit of stress just to hear that three-letter word – Yes! You know your prices are right when your customers consider the cost, but buy what you have to offer because the benefits outweigh the price.
When you’ve established a pricing structure that works, you’ve accomplished a great deal – you’re satisfying your customers’ needs and boosting your bottom line.