Small business pricing training may seem unnecessary. But in reality, pricing can be a challenging part of an overall marketing strategy.
Pricing strategies will help small businesses make money. Nothing affects your profits like what you charge for your products. Look no further for effective small business pricing training. We’ve asked small business owners across the nation for their top tips.
To start, here are our top tips on pricing strategies:
Tip #1 – Make sure you know what benchmark you are using to determine the price of your product or service. Are you using your cost plus a profit factor? Are you using your competition’s pricing? Or do you offer something so wonderful, you can charge based on the value you are offering?
Tip #2 – Make sure your product price provides you with at least a 30% gross margin. If every unit of a product you sell does not contribute at least 30% of its retail value as gross profit (or gross margin) to the business, it’s probably not worth offering that product. (If you don’t know what “gross margin” is, watch these videos. In just a few minutes, they make complex business concepts easy to understand).
Tip #3 – Product pricing is as much an art as a science. It’s always much easier to reduce a price than to raise a price. Start high and base the price on the benchmark you have chosen. Test the market. If you have three products in your product line at high, medium, and low prices, 20% of the time people will choose the high price.
If you only have two products in your line priced high and low, most often customers will choose the cheaper one.
Tip #4 – Offer a choice of products at different prices. With a wide selection, people feel less “backed into a corner.” Several different price ranges will make your customers less likely to go to your competition to get what they want.
Tip #5 – If some of your customers are unwilling to pay a premium price, offer them a “stripped-down” version of your product so they can “sample” the benefits it brings. Answer all of your customers’ questions. Make sure they’re happy.
Then offer the expanded version or add on services three or six months later. You’ll build credibility and you’ll build your revenues without high-pressure tactics.
We’ve canvassed pricing hotshots across the country and put together some great articles. For up-to-date training on small business pricing strategy, check these posts out:
And if you get stuck, don’t be afraid to hit the Panic Button. It’s the only help desk for small businesses online. No nonsense. No kidding.
Don’t forget to watch our training videos. Don’t know what a P&L is? Don’t know how to prevent bankruptcy? You can’t miss these videos, available to you 24/7. Go to our Learn section to watch as often as you like. Besides finding great small business pricing training, you’ll learn highly valuable tips you can’t afford NOT to watch!