The key to succeeding without competing on price is understanding and utilizing your “unique value proposition” – what sets you apart from your competition. You don’t have to be cheaper if you are better and therefore provide additional value for the additional cost.

To decide whether you need to adjust your pricing or not, you need to know a lot more than your costs and what your competitors charge. Here are some factors you should consider:

What is the customer willing to pay? Many businesses make the mistake of basing their pricing directly off their cost for providing that service or product (i.e. “It costs us a dollar, so we should charge two.”). Instead, start by deciding how much customers are willing to pay.

What kind of customer am I targeting? The answer to the first question depends largely on this one. Do you want to cater to more clients at a lower margin, or make more money per client but limit the size of your market? Ideally, you’ll be able to identify different price points, segment the market, and maintain both types of customers.

How should I react to my competitor’s prices? Your prices shouldn’t revolve around your competition’s, but it’s certainly a consideration. First, honestly identify if your overall experience is better or worse than the competition. If it’s better, decide how much and price upward.

Can I change some price points and not others? With different price points, you can still bring in the cheap crowd, but not miss out on the big dollars from those willing to pay for the best of the best. Perhaps you can benefit most from only raising your base-level tanning price, or only your higher-level prices, or maybe only your sessions and packages need to increase and your memberships stay the same.

How can I fluctuate my prices? Different customers are willing to pay different amounts for the same services, and even the same customer’s willingness will vary based on the purchasing occasion (in-season, off-season, etc.). Pay close attention to customer buying habits to determine when, and for whom, to adjust prices.

Am I giving the customer a reason to pay more? If you want to charge more for a product or service, it’s your job to make sure the customer understands and values the difference between the lower priced option and yours. The difference may be based on pure value, or something more intangible like the environment and overall experience you offer. Just make sure it’s obvious to the customer.

Are intangible benefits part of the equation? As mentioned above, sometimes your differentiation can come from intangibles like great service, environment, and overall customer experience. These elements are often more apparent to customers than having the best equipment or products.

Should I offer discounts? Promotions can be good but don’t overdo it. If you have to regularly discount products and services, there’s probably a larger problem that you need to address. And once customers get used to a discount, they won’t be happy about paying full price again.

How does the customer want to buy my product or service? Make sure you have strong options for customers that want to pay for individual visits, as well as those that want membership. Both types of customers are valuable in their own ways. But assuming you’d prefer to sell memberships, you’ll have to make that offer attractive enough to secure commitment.