Business Pricing Strategy

Developing a Pricing Strategy

Look at your competitors, the key benefits and features of what they offer and any points of difference you can see in your own product or service. You can get valuable guidance on how to price by conducting research into:

• Which products or services offer the best value
• What customers expect to pay

Compare the level of risk buyers face with each product or service you research. If you’re able to offer more value, such as better quality or additional features, you may be able to justify a higher price.

Continually Review Your Prices

Review prices regularly to ensure you’re keeping up with trends in your industry and the overall market. If you cut prices, customers may not respond if they perceive new prices as signaling low-quality or a lack of confidence and experience.

Convincing Your Customers

If you’re sure your costs are optimal, look at convincing your target market that your products or services are worth the price. For example, can you:

• Provide guarantees or longer warranties?
• Offer free services such as after-sales service?

Remember to talk about the specific benefits of your goods or services, not just the features. For example, one of your products might make a certain task easier, cheaper, faster, or more efficient than traditional methods. This is generally more important to consumers than the technical specifications of a product.

Deciding to increase your prices

Before you decide to increase your prices, do your due diligence on the competition and find out what they’re charging. Keep in constant contact with your customers and take their feedback on board. Remember that you’re convincing them that the price increase is worth it to them to keep you as a supplier, so the customer experience, product and service must be consistently great.

Communicating your price increase

The hardest part of course is actually informing all your customers the price is increasing. Options to consider:

• Contact customers and tell them why you’re increasing your prices (for example, your material costs have increased, exchange rate has moved). Often customers understand.
• Increase prices on less sensitive items and don’t say anything. You’d be surprised (depending on your industry) how often a price increase goes unnoticed
• Give customers warning in advance, rather than an overnight increase. Talk to any key clients that could be unhappy and discuss solutions and options with them.

Summary

Review your pricing options before you decide which suits your business best. When you’re deciding on your strategy, it’s a good idea to consult with your accountant or adviser, to make sure you’re not missing any calculations out and that you’re charging enough. Unless you’re planning to seriously disrupt the market, you should be aiming to charge as much as you can.

*These resources are guides only and should neither replace competent advice, nor be taken or relied upon as financial or professional advice. All information contained in this blog is for informational purposes only. The credit union makes no representations as to the accuracy, completeness, suitability, or validity, of any information. The credit union is not responsible for any errors, omissions, or any losses, injuries, or damages arising from its display or use. All information is provided AS IS and with no warranties and confers no rights. The credit union is not responsible for material that is found through non-credit union links posted on this blog site. Ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.