Are you wondering how much to charge for your goods or services? Well, you’re not alone. Nearly every entrepreneur, veteran or newbie, finds establishing the price of their goods or services to be a most difficult task. Let’s take a look at one critical component of price determination: Market Positioning.
|The market position of your good or service strongly influences its pricing.
Whether the price is set too high or too low, entrepreneurs often make the mistake of pricing their goods or services out of line with market position. This can confuse and frustrate the customer, which isn’t good for sales.
Consider these two examples:
in-between?What is the market position of your product or service?
The first step to determine the market position of your product or service is to complete an analysis of your competitor’s pricing. Be sure you’re comparing “apples to apples.” After a bit of research
you’ll get a sense of the pricing structure that’s in place for your product or service. With that information in hand, you can now determine where your product is positioned in its particular market. Keep in mind that your product or service is unlikely to sell if it’s drastically out of line with the established price structure.
Pricing your good or service on the low end of your industry’s standard will speak to those searching for a bargain. Pricing it on the high-end will of course appeal to those looking for higher quality. If you price on the high-end, you must effectively communicate the unique selling proposition of your product or service to your customer. For example, Jenna should be sure her potential customers know that each necklace is custom made, handcrafted by her with precious gems, and should the necklace ever need repair, she’ll complete the work at no additional charge.
Once you’ve determined the price of your product or service, don’t “set it and forget it.” All markets change, so you will need to periodically evaluate the price of your product or service.
We’ll leave you with these pointers:
- There is no one right way to set the price for your goods or services, and positioning is just one of several factors that you should consider when doing so.
- The “ideal” price is one that the consumer is willing to pay, while supplying you with a profit.
- If your product or service isn’t selling, don’t automatically assume it’s because it is priced too high. Pricing too low, unattractive packaging and lack of marketing are just a few of the other factors that might be at play.
- Try not to compete on price, compete on value. Read about how the Unique Selling Proposition of your product or service influences its value.