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Marty Dalton

Are you pricing your products and services correctly?

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2 Answers

Jef Lippiatt

Jef Lippiatt , Owner at Startup Chucktown

I think the best way to figure this out is to test with actual or potential customers.

  • Do competitive research (figure out what other charge)
  • Figure out how your product and brand are different than competitors
  • Set the price you feel comfortable
  • See if customers would buy the product from you at that price
  • If not, why not? (capture feedback and details not just "yes", "no", "I don't know")
  • Tweak your pricing and try again
  • User
    Neil Steggall

    Neil Steggall , Partner at Wardour Capital Partners

    Hi Marty,

    I agree with Jef''s comments but would add that a common error made in pricing products and services is a failure to understand your fixed cost structure (including your anticipated wages) and accounting for this when building you costing and quoting.

    If when all costs are calculated you are above the market ask:

  • Is your product or service better than your competitors and if so why/how
  • Will your customers recognise this and pay the difference
  • If the answer to either question is no, you need to review your structure, costings & business model.
  • We often find clients say "oh our customers just won't spend the money". Quite often the client is trying to sell what they perceive their customers "need" whereas long term research shows both B2B and consumers buy what they "want". It is often only a small, emotive change yet the difference in meeting wants is usually the difference between profit and loss.

    To understand this better check out this youtube clip re Apple: http://www.ted.com/talks/lang/en/simon_sinek_how_g...

    Another good source is Peter Drucker re satisfying customer wants.


    Hope this helps,


    Cheers,


    Neil.

    User