At What Price?
When marketing a product or service, businesses find it difficult to set their prices. Too high, and no-one will buy, too low, everyone will buy, but you go broke. So how do you set your prices?
The basic principle of pricing is that you should set your prices as high as the market will allow. But what does that mean?
This means understanding the value you offer compared with your competitors.
Is your product stronger? Does it last longer? Is it better designed? Or is there a convenience factor? What is the value of such differences to the buyer?
For example, you can get a $2 chocolate snack bar at the service station as you are filling your car. You know you could probably get the exact same bar for 25% less at the supermarket, but you will have to make a special stop, and then you will have to wait in a queue. It’s just not worth the 50 cents you will save. But if the bar was $5, would you buy it? Well, you might if you knew that this service station was the only retail store for 200 miles!
Communicating your Points of Difference allows you to differentiate yourself from your competitors and justify the premium you place on your services.
When you know what your product is truly worth, and you have educated the buyer of its value, you will be able to set prices that reflect that value.
If you don’t understand your value, you will forever be just another commodity seller competing on price.
Discover 57 different ways to become a Price Maker rather than a Price Taker and learn the secrets of Price: How to charge More without losing Sales.
May Your Business Be – As You Plan It.
Dr Greg Chapman – The Profit Whisperer
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