The Price is Right! Or is It?
Pricing your products and services is one of the most critical decisions you’ll make, but there’s far more to consider than supply and demand, the Inc.com article “Is the Price Really Right? 5 Ways to Tell” explains. Consider these variables to decide if your pricing structure could use some refreshing:
Know your value proposition.
Before you consider outside influences, first ask yourself, not considering competition or other external factors, what is the value of the products and services that you provide? Be honest!
Know your customers.
Even if your offerings are worth a certain amount in a vacuum, it doesn’t matter if you don’t have access to plenty of customers who are willing and able to pay for it.
Know your costs.
You could make all the sales in the world and still lose money if you aren’t considering all your your costs. Sunk costs, labor, products, equipment, cost per customer visit…break it all down so you’re sure that you’re at least covering the cost of providing a specific service.
Know your competitors.
While it shouldn’t be your first concern, your competitors’ will always impact yours to some degree. Just don’t make the mistake of getting into a pricing war. The key is to provide the best value, not the cheapest price. Don’t try to copycat – try to differentiate and fill a need in the market.
Know the seasons.
Seasonality is a huge factor, especially in this industry. Just because you’re profitable during peak season doesn’t mean it’s going to be enough to make up for potential struggles in the off-season. While it may results in lower margins during prime season, pricing that incentivizes clients to keep their membership could be your best bet.
