Business Week published an interview with Andy Birol, a consultant and business coach, about setting prices for your products or services. Here's an excerpt:
What's the biggest problem small businesses have with pricing?
More than anything, small businesses look to similar companies and price against them as opposed to pricing against the value that they're bringing to their customers. When they price against their perceived competitors, they're finding the lowest common denominator in the marketplace.
Entrepreneurs seem to feel that if they don't undercut their competition on price, they will go out of business. Why is that?
Unfortunately small-business owners often feel some sense of inferiority or inadequacy about their companies. They don't have the confidence to say, I'm better, I'm different and here's why. What they need to do is develop the poise to ask their customers to make a greater investment in them, and then assure those customers that their returns will be meaningfully higher than if they go to the competition.
Sometimes "sticker shock" can hit us when we do business with someone for the first time, but if that first interaction leaves a good impression, it's likely that we will come back to do more business - even if the prices are a little higher. I, for one, don't mind paying more for good service - do you?
Comment Preview