Build A Better Business – Price Your Product Or Service Correctly

How much are you going to charge your customers for your product or service?

Getting your pricing right could double your profits at a stroke.

Many start-up businesses work out a cost figure for each product and add a modest mark-up – known as cost-plus pricing. While this method is common, it is not the only way to arrive at a price. Invest serious thought into your pricing methodology at an early stage.
Pricing usually depends on three things

Value – What is your product or service’s value to your customer
Cost – How much does it cost to produce your product or service
Competitors – How much do they charge

Value can be a hard thing to determine and if you are offering a product or service that is unique and highly valued you can get yourself out of the price competition altogether and charge a higher price.

There are two main ways of pricing, cost plus and value pricing, both require an understanding of your market and your competitors. There also many tactics such as lowering your price to increase volume or loss leaders (to sell a product at a loss to get new customers so you can sell to them at a higher price later)

What’s also important is that you know precisely how much gross profit you are making on each of your products or services, and what your sales volumes and sales mixes are at any one time.

Once again if you don’t have a management reporting systems that can tell you this and also maybe by geographical area how do you know where to concentrate your efforts and identify negative trends

We can help by either reviewing your current pricing and reporting or by recommending and installing a new system tailored to your business. There are many good very reasonable priced systems such Sage or Xero that will provide you with essential insightful information.