Finding the right price point
For the past two days I’ve encouraged you to think about the concept of value and challenged your thinking about whether people buy based on price alone. How do you know what to charge and whether your price is right? Finding the right price point is tricky. You must consider your ideal customer, your solution, your value and your business goals.
If you’re offering a discount price for a premium product, and you’re trying to appeal to high end customers, you’re going to get people questioning your quality and experience. On the other hand, if you’re charging top price, but marketing to budget shoppers, you’re not going to make sales.
There are several key factors to pricing:
- What are your business goals? Your price must cover your costs plus allow for a profit margin if your business is to be successful. Are you wanting lifetime repeat customers or does your business model preference one off high end purchases?
- Who is your ideal customer? Are you trying to appeal to customers looking for quality, experience and unique skills or are you hoping to appeal to those more interested in affordability?
- Are you offering the right solution? Have you considered your ideal customer and are you solving a unique problem for these people? Is the problem one commonly faced by your ideal customer? How many other versions of the same solution are available in the marketplace? How is yours different?
- What extra value do you provide compared to competitors? If all your competitors are charging $100 for exactly the same product, and you’re not offering anything different, then price yours at $100 too. But if you’re offering the same product with more expertise, better service, an additional guarantee or more convenience then you could quite easily charge more than $100.
Today’s challenge is to think about how to price your service or products. Consider where you want to position yourself in the market. Match up your target audience with your value proposition. Consider your business goals. It’s perfectly ok if you want to position yourself as a discount specialist or as a premium provider. But you generally can’t do both effectively at the same time.