Pricing your products and services is part of your overall marketing strategy. How well do you do it? Few business owners do it well, because they make it hard for themselves.
When I coach writers, the pricing question comes up over and over again. They want a no-fail, one-size-fits-all pricing formula.
It’s impossible to create one, there are too many variables. There’s one simple guideline: cover your costs. Your aim is to stay in business, and create a profit.
I love this story, Case Study: My 12 Yr Old Puts More Value on His Time Than Most Small Business Owners | The Marketing Nut, and agree with the sentiment. Pricing isn’t difficult, a child can do it:
- “He immediately saw the value he was offering me and was ready to renegotiate the deal.
- His new offer was that I would double my payment to him (making total payout now $10).
- His new deal also put a limit on the number of photos he would search.
- I agreed to the deal and told him to find as many photos as he could.”
What are your costs?
You can’t set a price for a product, or a fee for a service, until you know your costs. If you’re selling products, you need to know their costs, not just the dollar value you’ve paid, but all the associated costs — insurance, handling, storage, and so on.
If you’re setting a price on your services, you need to know your costs too. When I’m working with writers, I find that they spend too much time worrying about what other writers are charging, rather than sitting down, and working out exactly what their own costs are.
If you’re new to pricing products, get advice from your accountant, or from other business people.
The same applies when you’re selling services. Whatever you’re selling others are selling similar services. Ask around. Make friends. Pricing isn’t magical, it’s simpler than you think.