Pricing your goods or services can be the most complex part of the whole marketing process. What are you worth? What is your product or service worth? How do you justify your rates or prices? There is a lot to think about.
Pricing your goods or services can be the most complex part of the whole marketing process. What are you worth? What is your product or service worth? How do you justify your rates or prices? There is a lot to think about when starting or running a business.
Read this guide from SmallBusiness.co.uk and marketing specialist and Q&A panel expert Jackie Jarvis Director of Marketingco.biz:
What are you worth?
The most important thing to consider about prices and rates is that you must charge in accordance with the value that your client will receive from you. Your service or skill will be more valuable if:
- you can solve a very costly problem and save your customer money
- you add tangible and solid value to your buyer's bottom line
- what you do is rare or in demand and there are a shortage of suppliers
- you can offer value that no-one else can
- you have a history of success and results achievement that back you up
- you have a strong unconditional guarantee.
Why is it important to charge what you are worth?
Pricing has a strong influence on how you feel about the value of what you do. If you undercharge, you may end up working very hard for little money. Low pricing could lead to your company being perceived as a lesser option and therefore not so valuable. You could end up with a lot of work but no time to develop and grow your business or your skills.
Over-charging can be equally problematic. You don’t want to price yourself out of the market, or find yourself under such intense pressure to deliver the high value that equates to the price you are charging that it affects your delivery.
Is your price right?
Questioning your current pricing structure and the way it is presented to your clients is a very useful exercise. Consider ways to add value to your service that will justify the prices you want to charge. Look for a way to increase your prices and make a positive impact on your bottom line.
Your challenge will be to establish your worth to your customers and put a price on it. You will then need to communicate the value you are offering to justify that price. You will need to decide exactly how you are going to price your work, for example:
- by the hour
- per project
- seperately for different packages
- for each individual task
- by results.
People's perception of the price you charge can also be a challenge for you. It can influence both buying and selling behaviour. Some only see value when the price is high, and if it’s low the assumption can be that the quality is absent. Think about using customer comment cards or short questionnaires that ask whether your clients feel they are getting value for money.
How do you know what to charge?
You will need to consider:
- the potential value of each project to each client
- the potential impact the solution will have on your client's bottom line
- what the market conditions are in your industry
- what your competitors charge versus what they offer
- the time it will take to complete the project
- the complexity of the project
- the client's timescales
- the resources required to deliver the results.
For details of Jackie Jarvis’ evening Seminar 'How to Promote Your Business and Generate Leads' in June, visit our event calender.
See also: A guide to IP