The Small Business Column

When you put a price on a product or service you are not only putting a price on it to entice customers but also putting a worth on your own skills and the business itself.

So, here are a few things to consider when you’re setting that price.

Every business needs money to survive and, more importantly, to grow. That means that, when you set a price on what you do, it should have the present and the future in mind. As you refine and improve the product offering you will need to look at increasing the price as well.

So, getting your pricing structure right from the beginning is a must. Being in business is all about the money. No matter who you are, you have to think about the money and where it’s going to come from.

Price is not value any more. Value is what happens after the product is turned over to the customer. In other words, the time after the sale in which the customer will make up their mind as to whether or not what they paid for was worth it.

That means their experience with the product, its reliability, or its functionality.

If you’re selling a service, has your service provided a significant benefit to their business?

The customer experience is the value, so your price has to match value as well.

Charging somebody a huge amount of money for an average product or service is a bad idea. Sooner or later, somebody will come through your customer’s doors with a better offering at a better price and when that happens, be prepared to watch your business evaporate.

Under-pricing your services is all well and good. You may get loads of business but now the difficulty comes in when raising your prices.

You’ve done great work for them; now it’s time to start thinking of bigger and better things. However, in a fragile economic recovery nobody will appreciate a hike in prices. So, be prepared for some upsetting phonecalls.

Overpricing is something that happens with all too much frequency in Ireland. In order to act like they know what they are talking about, people put in way overpriced quotes or prices.

Entrepreneur and bestselling author Cliff Ennico says: “Find out exactly what your competition charges, and price yourself at 80% to 90% of what they charge.

“Then, if you sense a customer wants an even lower price, you can offer a one-time ‘new client’ discount, or perhaps a flat fee, on the first job you do for them.”

Everything you do takes up time. Making the product or discussions with clients all takes time. I talked earlier about value and it works the same way with yourself.

Value your time and the effort it takes to bring results to clients. Setting a price to be attractive is one thing, but if you are spending hours and hours behind the scenes making a great product or service then you are not putting a price on your time.

That time is valuable and can also be time spent with other clients or getting new ones.