New businesses, or businesses that break into a new market, are often worried how they should price their product compared with their competitors. They feel they must keep their prices low to be competitive.


However, there is a better way as the following  tips will show:


HAVE A STRATEGY FOR EVERY SALE

You need a strategy or a technique to get every order. It may be in pricing, but it may be in the way the customer is approached.


It takes experience to have insight or penetration into a market and find where you fit.


If the customer likes the rep, likes your design work, likes the integrity and reliability of your company he will at least give you a chance to mould your price. There is no point in offering a discounted price at the start.


SOMEONE CAN ALWAYS BE CHEAPER

New companies need to understand that there can always be a cheaper option. An established competitor with an established brand is often prepared to lose a little money in the short term to out-price a newcomer.


Don’t start a price war: nobody wins.


DON’T USE COSTS ALONE TO SET PRICES

Use your costs to give you the bottom line only. Base prices on what the market will bear. Work the market to find the soft areas where your prices are easier to obtain. This is often in the upper quality end of the market – customers who have money and who buy direct and not through middlemen.


FOCUS ON A SMALLER SEGMENT OF THE MARKET

If you can’t be the biggest in the market, then take a smaller sector of it and be the best. Everything that you do, you must do well. Your offerings must be superb in quality and finish. Price them at a premium and market them hard. You may not be the biggest or the richest, but you will make a very comfortable living out of being a specialist.


CHARGE MORE WITH LESS STRESS!

Next time you are considering how to price your product or service, look at how you can charge more by offering a better quality experience for your customer. You’ll be surprised at how much less stress is involved with pricing up instead of pricing down.


Source: Pricing for Results, John Winkler; Entrepreneur February 2015.