How to set the perfect customer attracting price
You’ve worked out your why, designed some gorgeous services and you’re fired up about the incredible difference you can make in your customers lives. Then you hit the big P roadblock, what price should you set? Let’s just get over the awkwardness of talking about money right at the start, it might not be the popular thing to say but we all set out to make bangers and mash (that’s cash for the non Cockneys reading this). You may love what you do but would you do it for free? Probably not.
There are three main ways to set a price for a product or service, cost based pricing, market based pricing and using your income goals. We will look at all three over the next few days but you should use all of them together to come up with your perfect price (one that covers all your costs, provides a profit that meets your income expectations and fits in the market).
But first, why is setting the right price so important? What's wrong with the suck it and see approach, set a price and see how your customers respond
If the price is set too low then you won’t make enough money to cover all the business costs and make a profit
If you set the price too high you will price yourself out of the market and not be able to compete
You usually only get one chance at a sale so trying a price and seeing the response will give you feedback but will also lose you valuable customers as they vote with their feet and find another business to buy from
The price you set also sends a signal to the customer about how you value the product or service you’re selling. For example if you set your price a lot lower than your competitors customers might think that the product or service is not very good
It can be all too tempting to set your price lower than your competitors when you start just to get sales. This is a huge mistake many newbie entrepreneurs make. It is a lot harder to increase your prices dramatically once you are established. You’d do better to start with an introductory offer so customers are aware the price will be increasing once the offer is over.
Tomorrow we will look at how to set your price based on what your competitors are doing and how you want to be viewed in the market.
Q - What is your number one biggest challenge with setting the price for your service? Comment below now, I would love to help
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