Is the price right?

May 31, 2015 by Andy Crow from Chorus Business Advisers

Is the price right?

Pricing your products or services correctly is not only important but can be incredibly difficult. However get it right and you will should lead to increase sales and revenue and of course increase profitability. Here are a few tips:

• Calculate all the costs of production. Materials, labour costs, marketing fees etc. This will create a critical baseline price. Pricing below this point will not be sustainable.

• Research your line of business for similar products. If they exist and you want to charge differently, clearly understand why your products & services are unique. If you're unique create your own perceived value.

• Research your target customer. Age, gender, size of business, etc all have different decision making characteristics. For example women buy differently from men and the young tend to be more impulsive buyers than the old.

• Be prepared to change your prices as circumstances change. Is there a sudden upturn in demand? Where are we in the economic cycle?

• Test different pricing models.

• Survey your customers to understand what they value about your proposition. Just as important is to ask people that didn’t purchase from you to understand why not! • Constantly create value to sustain price points in a competitive market

Remember undercharging is just as bad as overcharging!