Pricing is one of the most vital factors in making a profit for both retail and service companies. With the right business coaching, Perth businesses can increase their profits simply by setting better prices. Here are some basic rules when it comes to pricing.
Know Your Demand – Market research is vital to proper pricing. Whether your business caters to a broad spectrum or a certain niche, you need to know how badly people want or need your products or services. Demand always drives up prices.
Know Your Competitors – You also need to know what the competition is charging in order to provide a competitive rate. This is especially important for a new startup business. If you haven’t been around long enough to build a reputation for your business, you can’t expect people to pay a significant amount more for your services simply on the promise of superior results.
Don’t Undersell Yourself – Many entrepreneurs feel that in order to drive business growth they need to seriously undersell their competitors. While sales and discounts are a great way to bring in new customers (we’ll get to that in a minute), you don’t want to undersell by so much that you:
Give the impression your product or service is inferior
Lose money on your product
Have to provide a poor quality service to make a job worth your time
Take a loss on work
Utilize Discount and Sale Pricing – This is a great way to deal with extra stock when you thought a product would be more popular than it is. It’s also a great way to bring in new customers. You may break even or take a loss on one product so that you can bring in customers who leave with a cart full. You may also provide sales on seasonal work to bring in new customers at the beginning of the season or to encourage customers to get that one more service performed at the end of the season.
Getting the price right on a product or service is about a combination of keeping good records of costs, so you know what you have to charge in order to turn a decent profit, and research, so you know what people are willing to pay for a product and what your competition charges. After that, it’s all about getting your business out there so that people come into the store or call for an estimate. The right pricing and marketing plan will drive business growth, increase revenues and you will be able to take competitive advantage.