This section helps you consider your products’ and services’ value based on positioning and the costs associated with your business when determining price. Pricing is an art and a science. A lower price is not always better. Customers often associate price with quality. Depending on the quality of your product, the desired image of your company, and the other services you offer, sell the value of your business rather than the price of your product. Pricing is a market decision, not a personal one. What will your customers be willing to pay based on value to them? Customers have a price in mind that they will be willing to pay for certain goods and services.
Use your strengths (competitive advantage) to sway customers to buy from you instead of someone else. Comparison shopping exists. Price is not the only criteria evaluated by customers. Take quality, availability, expertise, service after the sale, image, and convenience into consideration. Customers will tend to price shop for things they need, and tend to pay for value when filling wants. If you have a truly wonderful product or service, but your customers cannot afford it, you will have a difficult time selling regardless of the benefits you business offers.
Price can also be used to control supply and demand. If you find your business unable to keep up with customer orders, your image or reputation could suffer because you are not responding fast enough to meet your customers’ wants or needs. Your solution could be raising prices. As price increases, demand will decrease.
Price testing is critical. When offering products or services, price them differently, in different segments of the marketplace, and measure the impact on sales. Keep adjusting your price until your customer orders are at a level you can handle. Be sure to know your costs and price accordingly to be able to cover your costs and hopefully turn a profit.