Is too little time spent on your pricing strategy affecting your ability to attract business?
A recent client story prompted this article.
The client spent a significant amount of time developing and preparing a marketing opportunity to take to market. All was looking good until it was quite evident from the feedback from the marketplace that the price was out of line with what people expected to pay.
This prompted me to think of how little time is spent on pricing compared to developing other elements of the marketing mix and the detrimental effect that this can have on your business
The cost of getting it wrong
Charge too much and you risk not winning the business, charge too little and you sell yourself short and run the risk of looking cheap (which might not be your desired image)
Determining the right price
People ask me how you value an opportunity. The worth of anything is the price that someone is prepared to pay for your product or service on a given day. The emphasis here is on the market valuation not your own
Common mistake 1
Determining value based on what you think something is worth, not the market
Common mistake 2
Adding up the perceived value of all the individual components to get an aggregate price.
You wouldn’t set the price of your house by multiplying the quantity of raw materials such as bricks by their retail value, why do it with your business
Common mistake 3
Setting a price based on what you need, a sure fire way to be out of step with the market
The key to setting the right price
The key is to spend more time on researching the market, identifying what similar opportunities are going for. The more information you have, the greater certainty you can have about the real value and right price for the market. You can then make a strategic decision of where to set your price in relation to the market and also have more confidence to hold your price when making the ask
So next time…
So next time you are heading to market with an opportunity, give yourself the maximum opportunity to secure the business and attract the maximum return by placing the same degree of emphasis on your pricing strategy that you place on developing other elements of the marketing mix such as product development and promotion