Whether you’re a small- or medium-sized business owner/manager, it is intrinsically important for you to have a firm grasp of your numbers when it comes to pricing your products. Taking the time to acquaint yourself with your costs, your overhead, and your surroundings can truly help impact whether you wind up succeeding in your line of business. We have put together some quick tips that virtually any business can use when figuring out a pricing schema for their company.
How much does it cost you to stay in business?
This tip may seem very basic and, quite frankly, it is. But you would be surprised how many people are not aware as to how much it costs them to operate their business every day. If one does not know their operating costs, it really is a shot in the dark then to know if that same business will result in a profit at the end of the year. This is called the “wing and a prayer” strategy.
If you don’t want to play your cards this way and “hit or miss” at the end of the year, then you need to become educated as to what your business costs are – on everything from the utilities and rent to your printing and miscellaneous costs. Once you know this, you can then venture to begin setting prices that will help you garner a profit. You might want to leverage this handy tool that was created by Business Queensland to help figure out your pricing.
Get a sense of what your competition is charging
Another thing to consider when constructing your pricing strategy is what your competition is charging. You can get a sense of this by logging onto the ATO website and looking up the small business expected income benchmarks. This should give you a sense of where you fall in price. Don’t be afraid to be on the outer rims of the spectrum so as long as you believe you have a good reason to be able to command a premium price.
Determining how your business might be affected on a seasonal basis
If you are in a seasonal business or offer seasonal products, you might find this a bit more challenging than most as your business/products may wane greatly only to find business surging at another time of the year. You may adopt a popular pricing strategy of charging a bit more during the off (or “scarce” season) to make up for the lag in business at other times of the year.
Finding out what customers are willing to pay for your services
Finally, it will pay off to know what is in your customers’ minds when they are purchasing your particular services/products. How much are they willing to pay for it? Are you on the low or high side of the range? What might be the difference in quality, service standard, and cost between you and your competitors? This can also be ascertained through market research. If you are creative enough, you may be able to do this yourself. But it would be best carried out by a qualified professional.
If you’d like some expert advice or assistance on accurately pricing your products and services, call us today on 1300 123 181 and we’ll help you to ensure your maximizing your profit and sales.
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Brisbane Small Business Accountants, Financial Planner & Trainer Odile Mignot from AVB publishes the popular “My Business Success Newsletter” a monthly ezine with over 2500+ including solo-preneurs, entrepreneurs and business owners.
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