One of the difficult tasks you may face as a small business owner is pricing. Although you know the value of your offerings, your price points must also align with external factors that include supply, demand and competition in order to attract paying customers.
Here are six important points to keep in mind once you begin pricing your goods:
1. Your selling prices must at least cover your expenses.
2. The lower your expenses, the lower your prices can be.
3. You need to price your products so that they will sell. Do not over-price or under-price your product or service.
4. Always consider your competitors. If you are in a very competitive industry, the market usually determines the price you can charge.
5. Know your break-even: the quantities you sell and your gross profit margins will have a direct impact
6. It is far easier to offer a discount on a high price than to increase a low price.
Do your research beforehand to avoid over or undervaluing your business products. Sometimes pricing may take tweaking before you can set them in stone, and even then, keep an eye and ear out for factors that could potentially affect your prices such as new technologies, market trends, legislation or the overall state of the economy.