One of the most challenging aspects of running any business boils down to the opening line from that famous song:
“How much is that doggy in the window?”
Nothing can cause as many sleepless nights for a small business as trying to figure out exactly how much to charge for their products/services.
Charge too little, and you leave money on the table – you could go out of business.
Charge too much, and you scare off potential buyers – and again, you could go out of business.
It’s a tough dilemma, and there’s no one solution. But here are a few alternative pricing strategies from the site Hubspot to consider when filling out those price tags…
Competition-Based Pricing – this boils down to looking at what your peers in the market are charging for equivalent products/services. The thinking here is that you want to stay competitive with everyone else and beat them with better marketing, service, quality, etc.
Luxury Pricing – also known as “premium pricing,” this approach ignores the competition and instead focuses on the perceived value of what you offer. It’s a common approach used in the fashion and technology industries (Apple anyone?) to set themselves above and apart from everyone else.
Bundle Pricing – Here’s where you abandon the idea of selling one item at a time and instead bundle products/services into high-value packages. This enables you to create offers of higher perceived value and, therefore, higher prices.
Probably the worst approach is to go for the lowest price possible – a bargain-basement strategy. While it may work to get customers in the door, the biggest problem with this is that it’s the most obvious way to enter a market and you run the very real risk of getting into a pricing war with a competitor willing to lose lots of money in a mad dash to the bottom.
If you have a business of any kind or size, making sure you have your personal finances carefully managed and protected is critically important. For a free 15-minute call to chat about your portfolio, contact us at 513-563-PLAN (7526) or book online.
Nikki Earley, CFP®