When we start a business, the hardest task is nearly always pricing your product or service.
There are many approaches as to how this should be done and the most favourite one tends to be cost plus markup. But what if your cost is time; how do you put a price on this? As a Business Mentor, I offer two ways of reviewing this; the cost of doing something else and how it compares to the competition. Both are equally important but best done in unison to really check your pricing is right.
The cost of doing something else can be difficult to monetise but let me give you an example: In broad terms, as a Business Mentor, I spend time in meetings with clients and preparing for the next meeting for each one. These two aspects must be covered by the cost I give my client. However I also should factor in travelling to and from the meeting as this is time, I could have spent doing something else. E.g., meeting another client and increasing my income. Especially when offering a service, having a holistic view when it comes to pricing ensures you do not fall in the trap of ‘I will charge what I want to earn’.
If this is your approach, you could be lucky, and pricing is right, but you could also price yourself out of a market. And that goes for pricing being too high but also pricing being too low.
Checking your price against competition is a worthwhile exercise. It also focusses the mind of what your unique proposition is. Being priced higher than competition is not a problem. It only becomes an issue if you do not offer more for the additional price. The reverse is also true for pricing your service/product cheaper than your competition. If you are offering the same then perception by your customers would be that your product or service is less valuable.
Getting pricing right for your business and for your customers is vital. However, it can be overwhelming as there are many components to getting this right. Having a Business Mentor at your side for discussion and support can eliminate some of the stress.
If you wish to have a no obligation mentoring session to review and see how I can help, please contact me; I will be happy to work with you to ensure your price is right.
Director & Business Mentor
Wokingham, Maidenhead, Windsor, Runnymede, Weybridge, Bracknell, Slough
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