Pricing your products and services is really tricky for small business owners. Price too high and you could lose sales. Price too low and you will lose profit and possibly even go out of business!
Pricing strategies are one of the most important keys to long term business profitability and success, yet most small business entrepreneurs continue to get it wrong!
Craig Ridley, Head Business Coach at YourBusinessCoachingClub said today that too many small business owners fell for the trap of setting prices based on competitor price lists or by using one of the many cost plus strategies that seem to have become industry standards. These strategies are often easy to understand and easy to implement, but they are also an easy way to damage business profitability and growth.
“Working out the price to charge for products and services is actually one of the trickiest decisions small business owners need to make” Mr Ridley said. “Price too high and the business could lose sales. Price too low and the business will lose profit and possibly even go out of business!”
“The right price is somewhere in the middle, and hopefully on the higher side.”
In a note to members of YourBusinessCoachingClub, Mr Ridley outlined a number of pricing strategies that small business owners should follow to improve their business performance. These included:
Understand the underlying cost of each product to be sold and service to be delivered to customers to establish the base line pricing level;
Understand the break-even points of the business and how price and volume affects profitability;
Perform market research to constantly monitor competitor pricing;
Build a point of difference into the business model that opens the opportunity to price at a higher level than the competitors;
Be brave, make changes and constantly monitor the impact of pricing changes to sales volumes and sales margins.
The members note was supported by a small business coaching video on pricing strategies from the club’s YouTube channel.
For more business improvement strategies for small business entrepreneurs and to become a member of the revolutionary online business coaching club, visit http://yourbusinesscoachingclub.com/