One of the main concerns for new businesses is maintaining a steady, healthy cash flow. Aside from demand and a solid idea, this requires working efficiently, keeping costs relatively low, and pricing intelligently. The pricing strategy you choose has more than the power to keep your business afloat — your pricing can differentiate you from competition, brand your company, and open your business to new markets That’s why among all the financial difficulties that you’ll face in business, from funding to getting paid, setting the right pricing strategy is important.
In order to set the right price for your business, you must determine the costs to run your operation. This includes the materials you may use to create your products, or the monthly costs that keep the lights on. How high your costs are wills depend on what kind of business you’re in. If you work out of your home with no employees, the main cost will be your time. Don’t forget to factor in how much time you’ll be spending to generate revenue.
One way to guarantee a desirable profit, is to first set how much you would like to make. With a finite number in mind, subtract your costs to arrive at a price range for each project or product. With your profit in mind, you will be more likely to reach your goals.
The most important variable to understand is the customer. Do comprehensive audience research to eliminate uncertainty about who they are. Become familiar with what they expect out of products or services in your market, and how much they’re generally willing to pay for them. Know their demographic trends and how frugal they are. The more you know about your target customer, the easier it will be to select a price point that appeals to them.
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Unless you’ve invented something no one’s ever seen before, you’ll have competition. While it can be taxing to keep up with competitors, this is essential to succeeding in business. With an understanding of what your audience will likely be considering, you can develop a strategy that makes your business a more desirable offer. Even just a quick look at your competition’s social media can offer great insight into their branding and market.
While thorough research will take time, the more you know about the space your business is in, the more likely you are to succeed.For help on determining which pricing strategy is right for your business, audience, and market check out this flowchart by Fundera:
Stacey Riska, aka "Small Business Stacey" is a serial entrepreneur who is passionate about saving small business and rebuilding Main Street. She helps small and local business owners become a #SmallBizMarketingWiz by teaching them marketing strategies that get MORE: MORE leads, MORE customers/clients/patients, MORE sales, and MORE money. Stacey is the founder of Small Biz Marketing Specialist, THE go-to place for marketing tips, techniques and strategies that get results. She's also the author of "Small Business Marketing Made EZ" where she shares the 6-simple-step plan to get your marketing into ACTION - literally and figuratively. Stacey is also the creator of the Daily Deals for Massive Profits, an online video training program that teaches small and local business owners how to use daily deal sites like Groupon to skyrocket their business growth and get massive profits. In this program she teaches from experience, as it was the key strategy that transformed her coffee and smoothie business from being $500K in debt to a 7-figure profitable business. When not saving the small business world, she enjoys sipping red wine, eating chocolate (who doesn't!) and spending time with her amazing husband.
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