Pricing Your Products, Some Food For Thought

One of the most difficult things entrepreneurs grapple with, is pricing their products and/or services appropriately. There is no prescriptive answer to this but here are a few tips to point you in the right direction:

1. How much value do you create for your customers? If for example I package a rare type of peanut and sell it in my shop, what value have I added to the peanut? In this example the answer would be sourcing the product for customers, cleaning it, transporting it and putting it into a package that makes it easy for them to carry home and preserve the peanut.

2. Do you have competitors and if so what are they charging? Now this does not mean that you should necessarily charge the same as or less than your them, but it does provide you with a reasonable range.

3. Building off of the previous question, what's your position in the market? Are aiming to be a price leader and undercut your competitors by having the lowest price around or are you competing on quality and charging a premium price? The extent to which either of these is viable depends on the nature of the good/service being sold.

4. The next logical question would be, who are your customers and what are they willing to pay? How sensitive are they to price? If they are less sensitive then price to them might instead be a signal of quality. Its important to remember though that your profit is not meant to be earned just from one customer, in other words don't be too greedy!

What are your thoughts? If you're interested in learning more about a specific pricing strategy for your business, email info@startsmartgh.com
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