For many business owners, setting prices is a sensitive topics. Many people feel that they have to set prices low to be competitive with other businesses. There are times when pricing low can be advantageous and times when it should be avoided. Here are some general tips and ideas for pricing your products and services.
Pricing Low
1. If you are selling a commodity product, then this may be a situation when you will want to consider pricing low. Commodity products are products that are easily available from multiple sources.
2. If your product or service targets low income consumers exclusively, then you may want to consider pricing low. Especially if you can make it up in volume.
Pricing High
1. If your product or service does not have a fixed perceived value, then consider raising the price. A product that you create yourself is more likely to not have a fixed perceived value.
2. If you are offering more value than your competition, then consider pricing higher. Higher value should command higher prices.
3. Service based businesses can often command higher pricing points. Not everyone provides the same level of service and skill.
4. Higher prices also equate to higher perceived value. In fact, some people will doubt the quality of your product or service if you charge too little and decide not to buy from you.
If you are not charging enough, then you might be leaving money on the table. Figure out if others are selling something similar to what you are offering at a higher price. For lower priced commodity items, figure out if there is a way to add value in a way that others aren’t doing so you can raise the price. Higher profits will give you more leverage and more options for creating value for your customers.
