Saturday, December 1, 2012
Six Biggest Pricing Mistakes
Wrong pricing structure can make the business work hard to serve our customers and achieve profitability.
If you need to set the price to be charged for a product or service, avoid the common mistake of pricing it.
Sell too cheap To set a realistic price, you need to know all the costs involved in making the product or service.
This includes costs such as prices ease tracing of parts and supplies, as well as less tangible costs associated with the skills and knowledge you bring to the table.
Some employers set a price that does not account for all these expenses.
They may forget to add overhead costs such as electricity, water or rent, or having difficulty to appreciate the value of their time.
One business approach based services are used to determine a reasonable price for the supply of goods and services are set wage per hour for loading services.
They then multiply this number by the number of hours required to complete a task in order to establish the overall price of the project.
Following the competition By basing your pricing structure on a competitor's price can be dangerous because of the costs used to calculate the price competition may have nothing to do with your costs.
They may pay a price lower or higher than you do, buy a different technology, and has a marketing budget larger or smaller.
Nevertheless, it is useful to know how the prices charged competitors so that you can realize that your price is realistic for the market. If you find that your prices are much lower than competitors, check to make sure you did not miss any of the pricing equation.
Price competition Pricing is simply to beat the competition is a weak proposal.
This way you will indeed attract buyers, but the chances of them not a loyal customer.
If low prices attract them to your business, they may leave your company so there are better options.
A better approach is to differentiate between your business with competitors in other ways, such as superior customer service, improved product characteristics, or better quality.
Waiting too long to raise prices Increased demand or increased inventory costs can put you into a position where you have to decide whether to raise or not to raise prices.
Some business owners avoid price increases because they fear customers will react negatively. In many ways, a better strategy is regularly gradually raise prices rather than burdening the customer with a large price increase.
In other words, a 10 percent price hike likely brought more negative attention than twice the price increase of 5 percent. Lowering prices without changing the shipment Some customers may be trying to subtly get a lower price than your company.
It can put you in a difficult position, especially if you run a business based on service. Sending an agreed order with lower price could send messages as if the initial price is too high, and all the next business would be open to negotiating the price.
A better approach is to accept a lower price, but changing slightly the delivery terms. For example, if you are negotiating the price for the technical installation for three months, you could agree to lower project costs that reduced the number of weekly meetings or monthly shortened.
Another reasonable option for large orders is set lower prices as discounts for large quantities.
Set the price at random Some customers may be urged to find out how you design the pricing structure, so it is important to get the fundamentals justify your pricing Additionally unless you are quite aware of how the costs associated with your prices, it would be difficult for you to recognize when it is appropriate to adjust your pricing.