Marketwired Blog

The Importance of Proper Pricing



By Mark Evans

 

When you’re starting up or launching new products, you’re bound to spend some time pondering the price of your products or services.

 

And if you’re not devoting a good deal of research and energy to the project, you should. Incorrect pricing can impact sales and the bottom line.

 

Overall, your prices say a lot about your company, so you need to get it right. Here are some suggestions for coming up with “proper” pricing:

 

Look around. See what your competitors are offering to see where your product fits into the scheme of things. Long-standing companies have been testing the market for years and have gone through some trial and error — so use their experience to your own advantage.

 

Do the math. Work with your accountant to know the upper and lower end of your pricing range. Be sure you’re not losing money on your lowest possible price and that your prices takes into account likely fluctiations in things like manufacturing materials and fuel.

 

Talk to your stakeholders. As you talk to your clients and partners about other issues, bounce price-points off them as well. Find out if they would consider your offering a good value at $100 or $500.

 

• Understand your market. If you’re offering a premium product or service, keeping your prices high can add to your brand image. But if you’re working in a highly competitive field where clients can easily access another company’s products, you may need to focus on being competitively priced.

 

Avoid publishing. On your website and written materials, stay away from publishing any prices, particularly early on. This locks you in. If you decide a few months down the road to make adjustments, you risk offending those who’ve seen the quotes.

 

Test. Starting with a “special introductory offer” can help you suss out your price point in the real world. If your new clients laugh at the deal, you know you’ve gone too low. If you get sticker shock reactions, you know you’ve gone too high. But since this was just an introductory price, you are within your rights to make changes when you get to the “real” price.

 

Aim high. Consider pricing your items or services on the higher end of what you think the market should bear. You can always lower the price or add more products or services to a bundle over time.

 

Avoid excessive discounting. If your prices do end up too high, avoid offering under-the-table deals all the time. If you do, customers will always be pushing for a price reduction, even years down the road. Simply create regulated discounts for bundling, extending service time or other factors, or just drop the price and keep it firm.


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