The way you price your products or services can make or break your business. Your pricing needs to be competitive, yet profitable. What’s the best way to arrive at that?
Here are five ways to increase your profitability through smart pricing.
Five Approaches to More Profitable Pricing
1. Always begin with a value statement.
Rather than focusing on price, explain why customers should purchase from you instead of the competition.
2. Don’t just mark up your costs.
That may work for you, but cost-plus pricing has no relation to what your customers are willing to pay. The result is that you may be pricing yourself out of the market OR you may be leaving money on the table.
3. Consider providing more than one version of your product/service.
How could you offer a good, better, best version which would allow you to increase prices as your customer moves from one level to the next?
4. To discount or not to discount?
Don’t assume that an initial discount will position you to charge full-price in the future. It’s not uncommon for “Discount Buyers” to purchase at your discounted price and then move along to another vendor when you present them a full-price offer.
5. Customers are not all the same, so consider differential pricing.
For example, for my speaking engagements, I have a standard rate and a non-profit rate (discounted by 50%). I developed this differential pricing when I realized I was missing too many opportunities to speak to non-profit women’s organizations who could not afford my standard rate.
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