Small Business Owner? Don’t Price Yourself Out Of The Market
If you are a small business owner you will be aware of the importance of pricing your product or service correctly.
You don’t want to price yourself out of the market by charging too much and likewise you don’t want to charge too little, as your profit margins will suffer. Charging too low can also affect the reputation of your business, as you may be seen as the cheap option. Customers look for quality and excellent service which reflects the price they are willing to pay.
In order to price your products correctly by taking into account fluctuations in the market, it is important to develop a pricing strategy. To do this you need to be fully aware of your accounts and the future sustainability of your business. You may wish to hire the expertise offered by small business accountants who will enable you to gain a clear picture of your profits and any shortfalls.
Complex models of pricing strategies have been developed, which can feel a little daunting at first glance. The aim of this article is to give tips on the best pricing strategy for your small business in simple terms.
Develop a vision
It is vital to have a clear vision for the future of your business. You may wish to expand, increase profit margins or develop new products. Breaking down your vision into achievable goals and targets will enable you to plan for the future and make steps forward.
Ensure you goals have the chance to be achieved by not being too optimistic about profit margins and build in a contingency plan.
Analyse your competitors business models and pricing plans carefully. Research the services and products offered by your competitors and collect information on manufacturing methods and product availability. Once you have collated the information you will be able to gain a clear picture on how your own business compares. If your competitors are using a more economical system to deliver products and services, could you do the same? If after your analysis you discover that your product stands above the crowd in quality, could you increase the price to maximise profit margins? Market analysis is essential and should be done regularly, not just when developing your initial business plan.
Research your target market
During your initial business plan you will have developed a good idea of your target market. You need to regularly review this to ensure your product or service is still meeting expectations. Does your target market still think your product is good value for money? Are they shopping elsewhere for a cheaper supplier? These are questions that can be answered by conducting surveys and collating the feedback. Research can be carried out via surveys, focus groups and face to face interview. This information will enable you to develop an accurate pricing strategy.
In a marketplace which is forever evolving it is important to check frequently that your pricing strategy is still relevant. Keep you “finger on the pulse” and make changes as necessary. This will enable you to stay one step ahead of your competitors.