Do you know what your service is actually worth?
Are you like most business owners who undercharge because you are fearful of not getting business?
A lot of business owners don’t know how to price correctly, this is why it is so important to have a pricing strategy and understand how pricing fits into your overall business model. Craig Toyne, Owner of Rethink Accounting sat down with us at a previous networking event and showed us how to set our price for profit. Below are some key take away’s from the event.
- Pricing is one of the most important drivers of profit
- Know what you are selling (specificity is key) so that you can clearly articulate to someone what you are providing
- Don’t discount, always sell value
- A common pricing mistake business owners make are not knowing who their ideal customer is and not increasing their prices every year
Types of Pricing:
- Penetration Pricing
- Economy Pricing
- Price Skimming
- Psychological Pricing
- Product Line Pricing
- Promotional Pricing
- Geographical Pricing
- Competition Based Pricing
- Value Based Pricing
- One Time, Monthly, Annual Pricing
- Cost Based Pricing
- break Even Pricing
- Freeware Pricing
- By Product Pricing
- Segmented Pricing
- Recommended Retail Price
- Loss Leader or Close Out
- Membership or Trade Discounting
The Psychology of Pricing:
- Perception of savings (99 instead of 100)
- Perception of value (free, bonuses, offers, sales)
- Perception of unbundling ($ per day, price individual parts)
- Perception of discounts
Some final homework from Craig – Take a step back from your business, look at your prices and answer these questions:
- What value do you give your customers?
- Does your pricing reflect this value?
- What does your pricing say about your business?
- What do you want your pricing to say about your business?