It’s all in the numbers …
As a business owner at any stage, it is important to create a strong pricing strategy that fits your industry, your market, and the expectations of your customers.
What did I miss from the list above???
Your pricing strategy also needs to fit your budget and income needs too!
So, let’s jump right into discussing how to determine pricing for your business.
First, you need to do your research.
I know for some research can be boring or uninteresting. But most of the answers to run a successful business lie in the research.
Research tells you:
How much it costs to make/produce your product or service.
How much it costs to distribute and promote your product or service.
How popular your product or service is currently and what selling trends exist (ex. seasonal highs and lows).
Who your direct competitors are and what their success has been to date.
Who your customers are, what they want and what they are willing to spend.
Gaps in the market.
The more you know about your product, the market, your customer, and the industry – the more answers you will have to make effective decisions.
The better decisions you make, the more money you can make.
Now, what do you do with all this research?
First, you make sure that you understand how much it actually costs to make your product or service.
Next, you add the appropriate mark-up to ensure all expenses are covered. When the right mark-up is added, you will make a profit each time an item is sold.
Then, you figure out how many you need to sell per day, week, or month to achieve the revenue goal you have.
Again, ensure you have created a pricing strategy that brings in enough revenue to cover the costs of running your business, as well as pays YOU!
If you’re feeling a bit intimidated, remember, you are not meant to be an expert in every aspect of business. There are so many wonderful professionals who are a phone call or email away to help you.
If you are looking for assistance, I recommend reaching out to your local small business centre, your local accountant or a business consultant who has experience building pricing strategies that will make you feel empowered when you see the numbers.