Tweak Your Biz » Marketing » If The Price Is Right…

If The Price Is Right…




Where to start and when to review…

Pricing your product or service is an extremely essential issue that every single business owner and sole trader must address. Get it right and you should find yourself dealing with happy customers. Get it wrong and you’ll either create the situation where you have too many customers and not enough money to cover the overhead or no customers at all.

Even if you have started up in business with the right pricing range set by customer feedback and you’re making a profit, this is something that needs to be monitored on a regular basis to keep up with consumer buying trends or changes in your product line. Even rise in fuel prices can trigger a change whereas a lowering in fuel might give you the extra cash flow to inject into a marketing offer. But if you don’t review and keep track of every aspect you are going to miss out on these opportunities.

When setting a price the best place to start is with your product or service. Remember that the overall aim is to make profit- either to reinvest, expand or take home. To do that you have to break down and cover you overheads. This costing must include everything for the creation of your product or service including a percentage for marketing, delivery charges, production costs, website maintenance, stationery, staffing, your time if necessary, and the list goes on and on…

If you’ve kept on top of things this shouldn’t take you too long. If you’ve employed someone to take care of your money as it’s not your strong point, then you need to ask them to help you break the costing down. It might make you more money savvy to do so which is always better in the long run.

With it all written down, double check to ensure it’s completely current. If you’re marketing a product needs to be divided by the exact amount that you can produce. It’s then a good idea to include an amount for contingency on top of this price to reflect any likely changes in your own market costs over the next six months.

This is your baseline costing. Look at this figure- does it look fair to you?

Then the ground work begins on actually setting a price. Some people add a simple 10% to their baseline costing, others 25% and it works for them. Calculate what it would be to do this and is it enough to achieve your initial profit relate goal? Will you sell enough at this price?

For others it is more a game of regarding their target market and seeing how their competitors place their pricing. Then this is where honesty comes in. Real harsh honesty.

What are you offering in comparison to your competitors?

Is your product or service better quality; is it organic, recyclable or Fair Trade made? Do you offer customer service and aftercare? All of these things are unique selling points, what makes you different from your competitors and the reason for why you can charge more or less than them in order to sell more.

All of these reasons are why you went into business- you honestly believed that you can offer something a little different to the norm and it needs to be priced accordingly.

If after looking at your costs you’ve settled on a price. Do you feel happy knowing your target market- will they be prepared and happy to part with their hard earned cash for it?

If your pricing is too high and you fear that no-one will pay that much for it, you still have a few options and Rick Stein the gourmet chef known in Paidstow, Cornwall for his Fish TV series turned this situation around to his advantage.

Rick recognised that a large percentage of his target market would not pay for his “a la carte” menu all year round. So to ensure sales he devised a scheme of owning four restaurants to fit all budgets and tastes from the top end cuisine right down to the fish and chip shop. The quality in all of them has his Rick Stein style but the pricing means that everyone can say that they’ve eaten his food. The humble chip once again wins as it brings him good custom and regular income from the masses.

Analyse your product again and see if there is a way that you can diversify like rick and offer different grades of service and product to fit consumer budgets.

When you are marketing high end goods, interestingly enough you will find that when the psychology of consumers is taken into account, most will save that little bit extra and pay more for that extra quality and assurance of good service, or for a rare or limited edition product.

Now you have a baseline price, you’ll want to maximise your sales so you need to write on a calendar your absolute key selling periods and your consumer buying times. This will help you implement marketing strategies that will work because they reflect your consumer’s needs. Any market fluctuations will be taken in your stride as you’ve left the room for them in your price leaving you confident that you can then do your job until the next scheduled price review.

It is very difficult to generalise on each product and service needs to be analysed specifically but with time and regular reviewing sessions of buying trends you will know your consumer’s mindset inside and out and will be able to adjust the  price accordingly giving you the best start in business.



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The Author:

Emma Wimhurst - The High-Energy Business Mentor, Successful Entrepreneur, Business Owner, Writer, Motivational Speaker, Business Mentor, Business Turnaround Expert http://www.emmawimhurst.co.uk/

Add Your Comment

  • http://twitter.com/fredchannel Fred

    Good one Emma.
    We are in the services sector so I guess it’s a bit easier to set/play with pricing since there are not that many factors involved as when you deal with a product.
    A very typical mistake that I’ve seen from people/companies that start in business is that they want to go for the lowest price. We had that problem too. Fortunately it’s been resolved.

    I don’t know who told us that the main way to be visible or acknowledged would be by having a very low price. What many people in business fail to see is that not only this strategy will be very difficult to keep, but there’s always going to be someone else that is willing to go out of business before you :)
    Give your product/service a unique twist, know how to explain it to customers and CHARGE for it!

  • http://www.btbtraining.com/blog Niall Devitt

    I remember working with a company that priced way too low in the first few years, the difficulties that this caused later was amazing to see. From not having a proper customer supports to creating a sales team that sold on price alone, it had caused many problems for the business.

  • http://www.encouragingexcellence.ie/ Mairéad Kelly

    This is something that a lot of people have big problems with and it usually comes down to fear and a lack of self-belief. I must admit I used to suffer from that too at one stage. We are all in business to make money and if we don’t price our product/service properly we run the risk of running a very expensive hobby either through under or over valuing it. Another business that manages to corner different levels of consumer spending is Tesco, from their Value priced products to the Finest priced products and the range in-between. Funnily enough a consumer program showed a few years ago that the same ingredients went into each range, just in varying quantities.

  • http://www.cgonlinemarketing.com/ Christina Giliberti

    Hello Emma, keep meaning to comment …. and then forget!

    When it comes to pricing I’m terrible; more of a words person. I daresay that this is something a lot of people dread. What I’ve come to realise is that everyone has a different concept of price based on:
    Need / desireability, potential for more business, value and quality.
    You then consider: complexity, time and costs.
    If you can price your product/service with this in mind, whilst understanding your ‘positioning’ and translate how you fit the criteria above, then stand by your prices.

    Nice blog, very helpful….thats why you’re one of my fave bloggers ; 0 )

    Tina

  • Ohbabydotcom

    Wow! What a great article. Thanks so much.

  • http://twitter.com/rasamalai Claudia Liliana G.V.

    Thank you! Thanks to your post I realized I do only limited editions! So I will be adding an Ltd after my shop’s name! And will also make more affordable, quicker to make items as well :)
    With thanks, Claudia Liliana/rasamalai http://www.etsy.com/shop/rasamalai

  • http://www.patriciabarden.etsy.com Patriciabarden

    excellent information

  • Claire

    Well I have found that this isn’t exactly true. I am selling sterling silver items at what I believe is a very fair price compared to what other sellers are charging. However, I have found other sellers selling the same item for more money and making more sales! Not only that but I have found other sellers selling the same style of item but only silver plated and not solid sterling silver items as I am. Yet they are charging more money and still selling more items than I am. Why is that?

  • http://www.encouragingexcellence.ie/ Mairéad Kelly

    I’d suggest you up your prices – if others are getting more sales at higher prices than you are at lower prices then at least match their prices. Just because you perceive the prices as fair, your market might not.

  • http://mtcagecreations.com Mtcagecreations

    Claire, I have seen similar situations in my craft area. What I have discovered is that sometimes people will see the same product at two different prices and actually purchase the higer priced item. Some people believe that a higher price = better quality even when that may be very far from the truth. I agree with Mairead Kelly, at least match the prices of your competitors. Your customers may be getting the impression that you have a lower quality product because the price is lower. Just a thought. Hope it helps.

  • Kabdab

    One problem I have with pricing is that I don’t pay cash for beach glass, I pay with hours. Hours & hours of searching the shoreline. And I enjoy it. So what should a person have to pay for that? And buyers that aren’t local don’t always understand how rare a “find” is becoming in our area; and they aren’t aware of the rarity and value of different colors of the glass. But, retailers sell items for 3 or 4 times my prices, but I still don’t have many sales.

  • Facundo

    Thanks! Indeed, anything that can prevent headaches :)n

  • http://www.encouragingexcellence.ie/ Mairu00e9ad Kelly

    Very useful post Facunda. I already know I’m going to have fun playing around with those in the near future.

  • http://www.encouragingexcellence.ie/ Mairu00e9ad Kelly

    Very useful post Facunda. I already know I’m going to have fun playing around with those in the near future.

  • http://profiles.google.com/richard.conroy Richard Conroy

    @37b80f46c3622a6b1e0a16c9f20c4035:disqus Great post. A lot of these WP plugin roundups tend to over-focus on eye-candy operations, and ignore genuinely useful, nay indispensable alternatives. I know options with respect to Caching & Minify and why you would use them (too many clients on the one share hosting shard), have used 301 Redirects for similar reasons, but WP Security Scan looks like a real find, especially on sites with too many admins (like one that I am building now: http://w3projects.org – ~15 people with admin rights). Installing it now.nnHowever for me qTranslate is the peach. I have seen professional translation plugins like WPML (site 5?) but nobody seems to get it when I try to explain what a translation plugin REALLY means. Too many suggestions along the lines of Google Translate. I actually have a potential client who really wants something along these lines (she is bilingual).

  • Facundo

    Hi Richard. Glad you found the suggestions useful. The guys that do qTranslate seem to really get it so if you decide to go that way you can expect even more features in the future I’d say. n

  • http://www.channelship.ie/blog Facundo

    Thanks Mairu00e9ad. Trying out new plugins is something I enjoy too of course :) n

  • http://www.cgonlinemarketing.com/ Christina Giliberti

    Excellent Facundo! Will add the ‘related posts’ one for sure. n

  • Anonymous

    Great list there. I also think it’s important to have a plugin to give users the ability to share a post they like on any social network, e.g. Twitter, Facebook, etc. Found a neat one today: nhttp://www.daddydesign.com/wordpress/social-toolbar-wordpress-plugin/

  • Facundo

    Thanks Tina. Makes sense, especially if you have plenty of older posts!n

  • http://www.hal9000.ie Jennie Molphy

    Great selection Facundo – there’s so many plugins out there, it’s good to get recommendations.nnnI’ve just installed Dagon Design Sitemap Generator – another useful one.nnhttp://wordpress.org/extend/plugins/sitemap-generator/nnnSo next up is WP Security Scan…

  • http://twitter.com/beatricewhelan Beatrice Whelan

    Some really useful Plugins there Facundo. For SEO do you prefer the All in One SEO Plugin or the SEO Ultimate Plugin?

  • http://twitter.com/beatricewhelan Beatrice Whelan

    That is a good one Simon. I use Digg Digg but it can slow up a site if you opt to use all of the different buttons. nhttp://wordpress.org/extend/plugins/digg-digg/

  • http://twitter.com/PaulPinnacle Paul Cawley

    I’m not sure if you’ve tried it yet Beatrice, or if Facundo will agree, but I’d opt for Joost’s wordpress SEO plugin ahead of both mentioned. Still technically in beta and continually being developed and improved, but already a superb (and stable) option.nnhttp://yoast.com/wordpress/seo/nnGood list Facundo. The security scan is a new one for me, looking forward to trying it out.

  • Facundo

    Thanks Jennie!n

  • Facundo

    @twitter-201285346:disqus & @twitter-155752094:disqus I normally go for All in one SEO because it is generally compatible with other plugins. I’ve tried Platinum SEO which is great but a thing to consider is that once you choose one of these SEO plugins if you then want to change you may end up having to re-enter metadata again or find a way to export it and import it (and it can be a bit messy as this is not built in). In short, I tend to decide based on the plugins I may need down the line too. n

  • Facundo

    Very true Beatrice nn

  • http://twitter.com/PaulPinnacle Paul Cawley

    A very valid point Facundo, both on compatibility and on import/export flexibility. nnMost of the tools mentioned are compatible with the SEO data transporter plugin (http://wordpress.org/extend/plugins/seo-data-transporter/), but it can still be messy if you’ve a high level of customisation on your site. Regardless of what methods you use to achieve it (Joost’s tool has a nice and tidy import/export function which works pretty well), ensure you have a safe backup before proceeding. It can cause serious headaches if you run into a problem down the line without a safe restore point.

  • http://blog.myprojecttracker.com Barney Austen

    Hi Facundo. A good list.nnnI’d also add a spam filter like Akismet. Not so important when you start off first but as you increase your profile online, targetted spam does come it’s way :)nnnCheersnnBarneyn

  • Facundo

    There’s a plugin for everything :) Didn’t know about that tool, excellent!n

  • http://www.seefincoaching.com/blog Elaine Rogers

    OK, you lost me after No 5 but the first few are excellent for WP non-techies like me. Looking forward to experimenting @facundov:twitter