Avoid These Pricing Strategy Pitfalls

One of the biggest dilemmas that small business owners face is what to charge when

launching a new product or service or when deciding on a price increase.

Often the result can be based on a combination of guess work and industry norms, which works to some extent, but can leave a level of doubt and concern about whether you are charging too little or too much. Not good when you need to have confidence in making a sale.

Pricing is a complex and emotional process, which is why there can be such wide ranging price tags on everything from shoes to chocolate bars.

So to become more savvy about your approach to charging what your products and services are worth watch out for these 5 common pitfalls when determining your pricing strategy...

Pitfall # 1. Charging a low price in the hope of winning lots of business. In reality what happens is that you attract clients who probably don't or won't value your product or service (they're shopping on price rather than value) and are likely not to be a good match in terms of your ideal client. Being seen as the low cost provider may work for Amazon or Wal-Mart but for a small business owner it can adversely affect how others perceive you and your brand.

Pitfall # 2. Lacking clarity over your prices sends out a message that you are unsure about yourself and what you offer. It may be due to anxiety that you will lose the work or a desire to please others. But by being vague and too flexible about what you charge, underestimating the amount of work, over delivering or undercharging you are sending a signal about your own worth.

If you are a coach, consultant or service provider remember, as Jim Rohn said, 'You don't get paid for the hour. You get paid for the value you bring to the hour.'

Pitfall # 3. Offering lots of discounts on your products and services. I personally love to take advantage of discounts but the danger with this approach, unless it's tied in with a sale or event, is that your clients will start to focus on the price of what you offer rather than the value. And over time not only will you educate your clients to expect discounts but it'll annoy those who may have paid the full price.

Pitfall # 4. Failing to understand who your ideal clients are and what they really want. When you get inside the mind of your clients you will begin to better understand their own needs and wants and these are more than what they'll pay. Although, of course, price is one consideration there are others such as quality, expected results, levels of service and return on investment.

Pitfall # 5. Not taking into account the whole environment in which you are selling your products or services. For example, if you are selling at higher prices or targeting higher end clients then they will want to experience that level of quality and service at every point of their interaction with you. From how you deal with their enquiries, the materials you send them, the business agreements that you devise to the way you show up in person. These days it's not enough to just increase your prices you also need to be able to offer an improved level of service for your clients. As the Gucci Family slogan says, "Quality is remembered long after the price is forgotten."

Although many people around the world face tough economic times, and we are more financially sensitive, ultimately, what will attract and retain clients is the tried and tested approach of value, quality and service.

by: Susan Tomlinson

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