As a business owner, it’s truly a challenge to figure out whether or not ‘the price is right’ for your services. While this gameshow is fun for viewers and participants, as a small business owner you shouldn’t have to guess what price point is ideal for your products or services.
Instead of falling victim to poor pricing practices, we wanted to discuss the most common pricing mistakes every business owner makes and how you can avoid making those poor judgment calls.
It’s hard to change your rates after so many years in business - we totally get it. But, what happens if your profit margins look the same year after year because you weren’t willing to raise your rates? Every year, the market changes - therefore people’s willingness to pay adjusts along with your company’s overall net worth. Seeing the worth of your business is an important part of your company’s long term success - which means reflecting that worth in your rates.
In many ways, a change in your rates or pricing reflects your company’s value - you shouldn’t be afraid to change those prices just because it’s a new cost adjustment for customers. By having high regards for your business, it’s just going to help your customers see the overall worth and value of your company. Just be sure to pay attention to the warning signs that it's time to raise your prices.
It’s a common misconception that if you are a small business, you have to come in on the lower end of the pricing scale. Stop that - it’s good to recognize your company’s worth! Your competitors aren’t going to stay on the safe side of pricing their products, and neither should you. Everything little bit helps when it comes to helping your business beat the competition.
Plus, you place yourself and your employees in a compromising position if you price too low. If you have the lowest prices on the marketplace, that might generate a lot of leads, but little to no follow-through. You’ll encounter price shoppers, rather than legitimate customer leads who want to work with your business and actually use your services. They’ll inquire about your product lines, promise to connect back at a later date, and end up ghosting you.
Price shopping is something you definitely want to avoid at all costs. So, rather than undercut your costs, price competitively enough that you’ll be taken seriously instead of getting taken advantage of.
It’s easy for customer perception to keep you reluctant about altering your prices, but a common mistake is grouping your products or services into a similar pricing realm.
It’s important to price based on the quantity, quality, and duration of your service - not just lump everything together. Cost-cutting strategies might seem like a way to entice customers, but in the end, they’re just going to end up questioning your products or services. Be sure to give distinct pricing, or quoting tools, so they’ll be able to understand and respect the differences in your pricing.
Whether you’re doing all the work yourself, or you have a team of productive employees handling the day to day tasks for you, it’s important to factor in respective labor costs to your pricing. Your time is money - and so is that of your employees. By undercutting labor costs, you’re not embracing the value of your business, and accurately assessing the cost and worth of your employees.