In my conversations with business owners, they indicate two parts of pricing that make them feel uncomfortable. The first fear is in setting the right price. Comments made include “feeling unsure,” “don’t know where to start,” or “not knowing what they need to cover all of the costs.” And they often wonder who they can turn to for help.
The second fear is even after prices are set, owners feel uncomfortable discussing their prices with customers. They think they may scare customers away or that they have priced their goods too high (or too low) and that they are not competitive. And listing prices, especially for businesss such as in the service industries, is just scary to them.
Being comfortable with your pricing means you:
- Know all of your costs and the profit margin you need – Check out our Friday Facebook page, 3/15.
- Beyond direct costs, understand you need a return on investment, that you need to pay taxes, paying yourself a salary (both for your work but also your management skills and time)
- Know where your competitors are at
- Consider the value/benefit you are bringing to the consumer
- Being open with your pricing. This article, http://bit.ly/u2FjS3, discusses this further.
The pricing process may feel like working in a black box. It need not be that way. There are tools to help you out. Also there are a variety of people willing to help out. Your CPA and banker should be on that list as should other small business support efforts.