The most painful, terrifying, daunting and intimidating task every small business owner must contend with is PRICING! Small business owners constantly tell me they don’t know how to price or even how to start to calculate pricing. Let me breakdown the basics of pricing into 6 PAINLESS steps:
1. Know what your clients need: This means you must know who your client is and what she/he really needs. Develop a profile of your client and create an excel sheet listing their needs.
2. Know what you offer: This means you know exactly what services you can provide. Create a product/service menu and add it to your excel sheet. Compare your service/product menu to your client-needs list to verify that your services meet their needs. We'll deal with the 'how much' in step 5 below.
3. Know what your competition offers: Your clients don't live in a vacuum and neither do you. Get to know your competitors: examine their websites, scrutinize their product/service menus. If your competitors don’t provide this information online, ask a friend to contact them and get this information. List your competitor's service menu in your excel.
Utilizing this information you can compare your services to theirs and also get insight into what differentiates you from your competitors and perhaps what you should or should not be offering in your service menu.
In addition, if a friend directly contacts your competitors, you can gain a greater understanding of your competition via their customer service. You can get insight into how they communicate with potential clients and learn some important lessons from this.
4. Know your competitor’s pricing: Again you may be able to glean this information from their sites, if not, once again have a friend contact them. List of their prices in your excel.
5. Know your own pricing structure: A pricing structure (PS) will take into account your expenses, your time, your product/service menu and your client’s purchasing habits. (A pricing structure is a complex and involved matter that deserves a blog of its own; stay tuned for a future blog!)
Why I separated pricing from the service/product menu?
I separated the two since ,many times small business owners worry more about pricing than about their products/services. I believe this is wrong – first deal with what you offer and then deal with the pricing. While you may not be able to analyse your competitors’ PS, if you have a clear picture of your own PS, you may be able to make some educated 'guesstimations' regarding theirs.
6. Now it’s time to put all this information to good use.
Ask yourself these hard questions:
Look inward: What services/products are the most popular? What services/products are the most profitable? Are there services/products you should improve or remove? Do you need to create product/service packages or should you create an ‘à la carte’ (each product/service sold or offered separately) menu?
Look outward: Again separate your service menu from your pricing. Compare your product/service menu with your competitors. Now compare your product/service prices with your competitors' prices. In what areas are you stronger? In what areas are you weaker? This step will also give you incredible insight into areas you may want to improve, revise and alter the way you work with your clients. In addition, this step will help you improve your potential client presentation and selling skills.
These 6 steps are not meant to be part of a one-time only process, but an exercise you must repeat on a regular basis to keep you and your business current, dynamic and hopefully, profitable.
Do you want to open yourself to a more successful business? Are you lost in the social media jungle? Let me help you re-energize your business and rediscover your passion in your profession. We’ll work together to improve your marketing strategy and online exposure and find the perfect target markets for your business. Contact me today to schedule a free introductory meeting.