Business tips – Ask yourself what your service or product is worth

Costing_Cnt.pngIn 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.

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

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)

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)

Article written by Jannie Rossouw, Head: Sanlam Business Market

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