Pricing Yourself into a More Profitable Business

Profits down? Sales down? One of the focus points you might want to examine is your pricing strategy. There are many ways to look at pricing your product or service. My thoughts on pricing can be summed up in a few short words. Do your customers want the best or do they want the cheapest? That is, are you differentiating your product or service in the market or competing on price?

The easiest way for you to make some determination about your orientation to pricing is to ask yourself if your customers are buying for value. And what do you do about it once you find out?

If your customers are buying for value, you should be pricing in the high end. The trick now is to figure out where in the high end to locate your product or service.

• Do some market research and identify at least 4 of your competitors.
• What differentiates your competition's product or service in the marketplace?
• What differentiates your product or service in the marketplace?
• Make some assessment for yourself where you think you fit and what value you would give to your customer in comparison to your competition. (Danger here … your competition may have an ineffective pricing strategy so be prepared to throw an outlier out of your considerations.)
• Make appropriate adjustments to your price even if it is significantly different. A marketing campaign to communicate to your customers will likely be necessary.

If customers are buying for price, you should be pricing on the lower end of the spectrum. The trick here is to locate where on the low end you should be.

• Do some market research and identify at least 4 of your competitors.
• What qualities are customers getting with every bump up in price?
• What do your customers get for buying your product or service as opposed to your competition's?
• Make some assessment for yourself where you think you fit and what value you would give to your customer in comparison to your competition. (Danger here … you can't deliver at a low enough price to cover your costs.)
• Make appropriate adjustments to your price even if it is significantly different. Again, a marketing campaign to communicate to your customers will likely be necessary.

What if your product or service really is a mid-market offer?

• Are there other mid market competitors? If so, how stiff is the competition?
• Danger here … There can only be a few of any one product or service in mid-market unless the demand is huge.
• Opportunity here … if there are none, you can claim the spot!!
• A marketing campaign to communicate to your customers could be very effective here.

Remember, if you have multiple products and or services, you need to examine these questions for each one and then for the line as a whole.

Here's a monkey wrench for you … now you know what you think about your product's placement in the market, do an informal survey of your more frequent customers. You might be surprised to find out that you are on opposite sides of the fence with this issue. Good luck with that one!

Miche Suboski

Reading the World