One of the first questions to crop up in marketing (particularly when marketing a new business or a new offering from an existing business) is how much to charge?
Here’s some practical advice that came out of a recent Entrepreneurs’ Circle discussion led by Nigel Botterill.
1. Consider the ease with which your prices can be checked against the competition. If easily, the purchaser needs a really good reason to buy from you and not someone else. (This is particularly pertinent in B2B: poor communication of value will mean that a potential customer will go for price because they see nothing to gain by paying more.)
2. Avoid pricing by what your competitors are charging or comparing like for like.
3. Make it crystal clear what you are offering for the money. Nothing deters people from responding more than price confusion/inadequate explanation.
4. Consider offering a choice of prices to add value. For example a premium price option that prompts potential customers to upgrade.
5. The prices you charge will go a long way towards determining the customers that you attract.
6. Your marketing strategy should always be used to explain and support your price proposition.
7. And finally, avoid low business/self esteem! Set a realistic price for what you are selling and remember … there is no prize for having the 2nd lowest price. If you can’t be sure of winning a price war, it’s better to lead with value and service.
In our next Knowledge we’ll be looking at creative ways to present your price and business proposition.