{"id":901,"date":"2019-08-28T08:46:54","date_gmt":"2019-08-28T08:46:54","guid":{"rendered":"http:\/\/emiratesbd.ae\/blog\/?p=901"},"modified":"2019-08-28T08:46:54","modified_gmt":"2019-08-28T08:46:54","slug":"the-price-is-right-are-you-charging-the-correct-amount-for-your-product-or-service","status":"publish","type":"post","link":"https:\/\/emiratesbd.ae\/blog\/the-price-is-right-are-you-charging-the-correct-amount-for-your-product-or-service\/","title":{"rendered":"THE PRICE IS RIGHT: ARE YOU CHARGING THE CORRECT AMOUNT FOR YOUR PRODUCT OR SERVICE?"},"content":{"rendered":"\n\t\t\t\t\n

THE PRICE IS RIGHT: ARE YOU CHARGING THE CORRECT AMOUNT FOR YOUR\nPRODUCT OR SERVICE?<\/strong><\/p>\n\n\n\n

Setting the price point for your product or service is one of\nthe biggest obstacles to success when starting a business.<\/p>\n\n\n\n

You\ncould have the best offering in the world, but without charging the right\namount you will either lose money or lose customers. Either way, you\u2019ll be out\nof business before you know it.<\/p>\n\n\n\n

So here are three tips to\nunderstand how <\/em>to go about finding\nyour place in the market, and charge the correct amount for the best return.<\/p>\n\n\n\n

1.\nDo Market Research As Part Of A Value-Based Pricing Approach<\/strong><\/p>\n\n\n\n

The\neasiest place to start is with some low-level market research. This doesn\u2019t\nmean hiring a market research company (although that\u2019s certainly an option).\nIt\u2019s where you scope out the marketplace yourself and see what other\ncompanies are doing.<\/p>\n\n\n\n

This is all part of value-based\npricing, which is identifying the perceived worth of your product or service to\nthe customer. And it should be noted that it\u2019s not about copying or\nundercutting competitors, but rather finding out what kind of ballpark you will\nbe playing in. And figuring out if you\u2019re even able <\/em>to\nplay in the first place.<\/p>\n\n\n\n

If\nyou find that your proposed pricing is vastly different to everyone else\u2019s, now\nis the time to identify why. Is your product\/service lacking something that the\nothers are all supplying? Or are you offering something that they are not? Can\nyou take advantage of this difference to justify your price and carve a more\nlucrative niche for yourself?<\/p>\n\n\n\n

If you find that your proposed pricing is vastly different to\neveryone else\u2019s, now is the time to identify why.<\/p>\n\n\n\n

Today,\nthere is a wealth of data ready for you to use to make these decisions \u2013\nwhether it\u2019s your own customer data, or reports and studies in the public\ndomain. Understanding this, and what your competitors are doing, means you\u2019re\nstarting out at an advantage.<\/p>\n\n\n\n

As professor of marketing and\npricing expert, Mark Bergen, said in a recent interview with Marketing Week: \u2018Companies who don\u2019t understand the value they create for\ncustomers are \u2018flying blind\u2019 on pricing.\u2019 <\/em><\/p>\n\n\n\n

What Should Your Next Steps Be?<\/strong><\/em><\/p>\n\n\n\n

Your\ninitial research should involve identifying your competitors \u2013 those selling\nthe same product or service as you \u2013 and noting what they are charging their\ncustomers (taking note of any special deals or packaged prices they may be\noffering).<\/p>\n\n\n\n

This\nwill give you a good idea of where you need to be pricing yourself in order to\nbe competitive.<\/p>\n\n\n\n

However,\nit\u2019s important to pick the right person (or team) to lead this research. You\nneed someone in marketing to champion this part of your business, because it\u2019s\ntheir job to understand your place in the market. And to understand the\nbehaviour of your target customers when it comes to pricing.<\/p>\n\n\n\n

When\nwe talk about \u2018behaviour\u2019, this is looking at how customers \u2018make sense\u2019 of\nprices, using ideas from both psychology and sociology to really gain useful\ninsights into how customers think and act.<\/p>\n\n\n\n

From\nthere, it\u2019s about devising a strategy to reach them.<\/p>\n\n\n\n

2. Work Out The Minimum You Need To Charge\nTo Survive<\/strong><\/p>\n\n\n\n

There\u2019s\nno point in setting a price point that will make you bankrupt. The aim of the\ngame is to be turning profits, so what your business charges for its products\nor services needs to cover all outgoings at the very least.<\/p>\n\n\n\n

Yes,\nyou might be able to charge slightly less at the beginning if you\u2019re lucky\nenough to have acquired serious funding for your venture, but your prices\nshould always make financial sense. If they don\u2019t cover enough for you to break\neven, you should probably rethink.<\/p>\n\n\n\n

Similarly,\nif the amount you need to charge just to break even is too high for the market,\nyou\u2019re going to need to adopt a different approach to building your products or\noffering your service in order to make it financially viable.<\/p>\n\n\n\n

What Should Your Next Steps Be?<\/em><\/strong><\/p>\n\n\n\n

You\nneed to work out all your costs. These include:<\/p>\n\n\n\n