What is your product or service worth?

In a competitive market environment business owners are prone to sell themselves short, because they do not take the time to determine a fair and justifiable price for their services and products. Below are some pricing strategies you can use to determine the worth or price of your product or service.

1. Value drivers

There are so-called "value drivers" that support the charging of a premium for your service or product, if:

  • It solves an expensive problem for the client
  • It saves the client money
  • It increases the client's turnover/profit
  • The demand for your service/product is high and there are only a few providers
  • You have a good track record with regard to delivery
  • You provide good warranties

2. Pricing alternatives

You can also consider the following pricing alternatives:

  • per hour
  • per project
  • per unit
  • per solution
  • per result
  • a "freemium" model – provide a basic solution for free, but charge a premium for greater functionality
  • based on volume (use a sliding scale for a volume discount)

3. Additional factors

The following factors can also influence your pricing strategy:

  • the price and value offering of your competitors
  • the market trends within your industry
  • the value your product/service has for a client
  • the difficulty of the work that must be done
  • the resources necessary to complete the work
  • the expected time frame within which the work must be completed

“Pricing is actually a pretty simple and straightforward thing. Customers will not pay literally a penny more than the true value of the product.” – Ron Johnson (American Businessman).

 

The content in this article was provided by Jannie Rossouw, Head: Sanlam Business Market. Sanlam is a diversified financial services group, headquartered in South Africa, operating across a number of selected global markets.

For more information, contact:

Website: https://www.sanlam.co.za/Pages/default.aspx

Tel: 0860 726 526

Contact form: https://www.sanlam.co.za/contact/Pages/default.aspx

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