Price Considerations for Your Small Business
One of the trickiest parts of operating a small business is figuring out just how much to charge for your service or product.
You probably know that base factor is what is going to make or break you as far as your business goes, but what should you charge?
Let’s take a look at some important consideration when it comes to setting your prices.
Initial Cost
Obviously, the last thing you want to do is lose money.
Whereas service based businesses come down to what the job is worth, selling products make pricing a bit more complicated.
You want to cover the costs of original materials, shipping, and so on, plus make a certain amount of money per sale on top. Don’t forget to take taxes into account!
Competition
The main factor when it comes to the pricing of goods or services will be what customers are willing to pay, and that is often determined by how much your competition is charging.
If you offer a service or product that is more expensive than a similar business charges, you have to have a good reason why.
Moreover, you need to be sure your customers understand the reasoning as well (the best way to do this is offer hints but let them come to their own conclusions).
Customers
Finally, consider what your target market will be willing to pay for your products or services. In the case of services, you may be lucky enough to have some flexibility.
Many times service based businesses are the first to suffer during recessions, as people begin to take on a whole new “do-it-yourself” attitude. If you can lower prices to fit customer’s needs without breaking your business, consider doing so until things pick up again.
Pricing will be an important determinant when it comes to who uses your small business. If you bill right, the customers will come.
