in: Business Strategy
by: Melissa Wildstein
Pricing can be tricky. Price too high and you'll alienate your customer, but price too low and your customers might just dismiss you! Case in point, when I first moved to New York in 1999, I looked for an apartment. I knew that prices in NYC would be higher than what I was paying in Atlanta, but I had a spacious 750 sq foot 1-bedroom apartment in Atlanta that I paid $650 per month for. Surely I thought, I could find a share in Manhattan for that price. Well, after seriously pounding the pavement, I raised my budget to $750, then to $850 and was approaching $900 when I came across an ad for someone looking to share a 2 bedroom apartment on the Upper East Side. My share of the rent? $650.
I almost didn't go. I knew what I'd seen at that price and figured that the apartment would be the same - dirty, dark, tiny and with the toilet in the kitchen! In contrast, the apartment was huge, filled with light, old and a little shabby but comfortable and it was my home for four years.
The same goes for pricing your product or service - pricing low doesn't necessarily mean that you'll get more customers, it means that you'll get cheaper customers - and that isn't necessarily the customer that you always want!
One of the best ways to figure out how to price your product or service is to do some research! Talk to your customers. Look at your competition. Then, take a really hard look at what you're offering. Do you offer a few more bells and whistles perhaps? Provide dynamite customer service that your customers adore? Have a proprietary process that no one else can duplicate? Then price accordingly (i.e, high)- and don't apologize for it. It's all about providing something that your customers / clients value and charging what they're willing to pay. There was a great post today by Wayne Mullins on QuickSprout titled, "How to go from making $32 / hour to making $115,000 / hour" and if you haven't heard the story of Joshua Bell, go check it out
Consider raising your prices - even by just 10%. And if you can't stomach that, do it in baby steps - raise your prices by 2% every quarter and you'll have given yourself an 8% raise by the end of the year and your clients probably won't even notice. What's more important is what you'll be able to do now that you have additional income coming into your business. You'll actually be able to spend more time on the customers that really value your product or service which in turn, will make them love you even more.