SCORE Small Business Blog

Are Your Prices Right?
0 Comments

Pricing products and services is one of the trickiest tasks tied to running a business. It’s a balancing act that requires choosing a price that works for both you and your customers.

So what makes a price right? Many factors contribute to the pricing process but ultimately, a successful pricing structure is one that reflects the benefits of your services, is competitive, covers your business costs, and is on budget for your key demographic.

That’s a lot of contributing factors, but one resource will quickly tell you if your pricing is reasonable: your customers. The following scenarios can help you determine the accuracy of your pricing based on your customers’ willingness to pull out their wallets:

That’s a NO.

Let’s say you’re negotiating with a potential customer, but after you share your minimum price with them, they turn you down immediately – leaving you high and dry. This scenario is all too familiar and doesn’t feel good. But it gives you a list of questions to consider:

  •  Did you present your product’s benefits so its value was clear to your prospect?
  •  Are there ways to cut your costs so you can pass the lower price on to your customers?
  •  Are you marketing your product to the right audience?

It takes research and time to narrow down your pricing mistakes, but when you do, you’ll be on your way to a thriving, lucrative business.

Yes, Yes, YES!

In this scenario, you wish you’d negotiated better. You offer your prospect a price and before you blink, their credit card is in your hand. That’s when you know you should’ve charged more. It’s obvious the customer knows they got a steal, but what did you lose? That’s what you need to find out.

When you’ve given away too much value for too little money, it’s time to re-evaluate your costs and dissect your competitors’ pricing. Do your competitors offer better customer service or options that add more value to their products? Do your research to discover a better pricing balance.

Let me think about it… Yes!

The deliberation might kill you (not really), but it’s worth every bit of stress just to hear that three-letter word – Yes! You know your prices are right when your customers consider the cost, but buy what you have to offer because the benefits outweigh the price.

When you’ve established a pricing structure that works, you’ve accomplished a great deal – you’re satisfying your customers’ needs and boosting your bottom line.

Shawn PfunderDirector of Communications, Go Daddy
Shawn’s been working in communications for more than 20 years. During the last 8 years at Go Daddy, he’s built dozens of professional websites, managed multiple writing teams, created training and education programs, and acted as an advocate for customer service throughout the company.
www.GoDaddy.com | Facebook | @Pfunder | More from Shawn

// |
 

Leave a Comment