Price and Value Go Hand In Hand
Pricing is one of the hardest parts of business. The more you do it, the easier it becomes, but even experienced business people often make mistakes when setting prices.
In today’s market, it’s especially important to get your pricing right. As consumers become savvier about making purchases, they expect to find a deal on everything from clothes to food and travel. If you don’t have competitive pricing or offer value in other ways, then you’ll lose customers to competitors who do.
Here are five common pricing mistakes that I’ve seen entrepreneurs make again and again:
Not Updating Prices – Not updating your prices frequently is a mistake that many businesses make. It’s easy to get caught up in the day-to-day operations of running a business and forget that pricing is always changing. If you’re not keeping up with those changes, it can be difficult to justify your prices when customers ask why they’re higher or lower than those of competitors’ services or products.
If you want people to buy from you, then offer them value at every step along the way–from advertising through customer service after-the-sale (and even before). That means being able to explain why what you’re selling is worth paying for, and at what price point, in an honest way that resonates with customers’ needs and expectations.
Pricing Based on Undercutting Competition – While it may be tempting to price your product or service based on undercutting the competition, this can lead to a loss of profits and customers. It’s important to understand how much it costs for you to produce your product or service. You can then use this number as a starting point for pricing your offering based on its value relative to other similar offerings on the market (e.g., “I think my product is better than theirs because…”). If your product has higher value than others in its category–and if people agree with that assessment–then they will be willing pay more money for what they perceive as having greater utility than competing products/services with lower prices.”
Not Offering Different Price Points – It’s not always about the price you charge, but rather the price points that you offer. Not offering different prices for different customers can make it hard to sell your product or service. You may have heard of upsells and cross-sells, which are ways to increase sales by offering additional items with an initial purchase. This is an example of how offering different price points can help generate more revenue than just one flat rate would do on its own.
If you don’t know how much someone would be willing to pay for what you’re selling, it’s best not to assume anything and definitely don’t hide behind jargon like “premium” or “luxury” when talking about pricing!
Selling On Price Rather Than Value – The first step in pricing is knowing what your customer values. You can’t sell money over experience, but you can give them what they value at a price that makes sense for everyone involved.
So how do you find out what people want? Ask them! The easiest way to do this is by conducting market research and surveys that ask about the most important things for your customers when making purchasing decisions. If there’s one thing we know about humans, it’s that we all like being asked our opinions (even if sometimes we don’t answer). But there are also other ways of finding out more information: talking directly with potential customers through interviews or questionnaires; observing them as they use products similar yours; looking at industry trends and benchmarking against competitors’ prices; analyzing current sales data (including refunds); etcetera et cetera…
Not Segmenting Your Customers – One of the most common pricing mistakes is not segmenting your customers.Segmenting your customers means to divide them into groups, based on certain characteristics or attributes such as price, location and experience level. You can also segment based on what stage in their buying process a customer is in (for example: pre-sale vs post-sale). This allows you to tailor different offers depending on who you are talking with at any given time.
Segmenting your customers helps you to understand what they want, why they buy from you and how much they’re willing to pay for it. By understanding these things, you can create offers that are tailored to their specific needs.
Pricing is a hard part of business, but it’s important to think through each step. You don’t want to be caught off guard by something as important as pricing. Keep these tips in mind when you’re setting prices for your products or services so that they reflect the value you offer.
