Perfect pricing – it’s neither an art nor a science, but a combination of awareness and gut instinct, with perhaps the occasional punch thrown in. More of that later.
Pricing is a key issue when it comes to making your business soar. Charge too much and you can scare off your clients. Charge too little and you devalue your services and – let’s be honest – cheapen yourself.
When your palms are sweating and you desperately want to finalize the sale for which you’ve worked so long and hard, that’s the moment at which you might be tempted to lower your price.
You can avoid this by good planning long before you’re sitting or speaking with your client.
To get your pricing right it’s important to know two things:
- Something about the psychology of the situation. It’s important to be aware of the nature of the individuals or businesses who are going to purchase your product or service.
- You also need to understand yourself. Ever heard the phrase “you are the expert on you”?
Whilst it’s important to be an individual in business and not copy the crowd, this is one occasion when you can take advantage of what other people are doing. Unless your product is unique, you’re in a shared market place and it’s helpful to know what other people are charging.
This is not so that you can charge less though! (The information about the punch is coming up so stay tuned.)
Once you’ve got a good knowledge of what people are charging in your market, consider your own product and use your gut instinct and self-awareness to price it. You definitely don’t need to go too low in order to compete. There will be some aspect of what you do that makes you different from the others. Keep reminding yourself of that difference and remember that if you start too low you have nowhere else to go.Perfect pricing - it's not a science, but a combination of awareness and gut instinctClick To Tweet
Now consider your clients. You’re not selling them something, you’re meeting real people with real needs whom you can help. Awareness of “your market” is no more complicated than understanding their circumstances and empathising with them.
If you have a very well-defined market – say mothers of children under five – then you will be aware of their needs. In this example, they’re very likely short on time and possibly only have limited money to spend.
If you have a more diverse market, then you’ll need to be more creative with your pricing and perhaps have a range of prices to suit different circumstances.
Related: Want to start a business but don’t know how? Learn how to make your first $1,000 in business
Once you are confident about your pricing, go for it! You will need to experiment a little, to begin with so don’t feel that your prices are set in stone from the start.
Now imagine you’re sitting there just about to finalize the sale and the deadly little voice that you thought you’d left at home whispers in your ear “You’re not worth that much!” That’s where the punch comes in as you’ll discover.
Find out how to deal with this voice and get more tips about perfect pricing, on Nadia Finer’s Business Podcast.