May 10
11

Are your prices where they should be?

10 Comments

I know I’ve touched on this topic before with the post Learn from an ex-FBI Agent!.

However, I just had to tell this story of a new business owner from a while back who was only in business for just a few months. Let’s call her Betty (real person, fictitious name). And believe me, when I say “in business”, even that was stretching the truth.

Without going into to much detail, this lady was a consultant of sorts. She was as nice as she was knowledgeable in her chosen field of work. However, she had one fatal flaw (as far as her business was concerned).

Basically, she was offering the bulk of her services for free! (not a typo… FREE) Betty told me she was doing this for the sole purpose of obtaining a customer base. Without any sort of agreement, she was telling her customers they can pay her when they could.

Well surprise, surprise! What do think happened but she worked her tail off, never got paid, and soon went out of business!

Betty’s story may be an extreme example, but the point is this… Many business owners simply don’t charge enough for their products and services when starting a new business. By not charging customers fairly to begin with, it undercuts profits and sets low expectations for your customers.

Another point I’d like to make is that she was expecting to get paying customers down the road by attracting the exact opposite target market! If you want paying customers, market to paying customers – it’s not rocket science!

Back to my point, make sure you’re charging enough for your services, whether you’re a start-up or not. Otherwise you’ll soon find yourself out of business just like Betty!

~Brodie

Tags: ,

Posted by Small Business Marketing Ideas 10 Comments

10 Responses to "Are your prices where they should be?"

  • fishing organizations says:
    May 13, 2010 at 11:54 am
    Reply

    Thanks for the article. I can’t tell you how common this is. People either have the “cost-plus-profit” mindset, which really causes them to usually leave money on the table; or they have the “I’m charging what I want” mentality, which causes them to loose sales by being too high.

    Then best way to set your prices is too look at what your competitors are charging. Perhaps be a little under, if you want to go discount, or be a little over, if you have a premium product. But, always make sure to be in your competitor’s price range.

    • Boise Marketing says:
      May 14, 2010 at 1:14 am
      Reply

      I don’t have a problem with the “cost-plus-profit” mindset, as long as you charge enough in the first place! But you’re right, most leave money on the table pricing their products and services this way. I’ll wager this is because they’re not calculating all their expenses and costs.

      ~Brodie

  • Fashion Bedding says:
    May 15, 2010 at 12:53 am
    Reply

    Thanks for the story. I have a few “clients” that are referred from friends and I guess I have a tough time getting through the “you need to pay me” conversation. Some of them are just starting out and having a tough time, but I get the feeling they would appreciate the services more if they paid. It seems like a conversation I just need to commit to have each time from the start. On the bright side, it would save me a bunch of time if we just parted ways at the beginning if they don’t want to pay anything.

    • Boise Marketing says:
      May 15, 2010 at 2:25 am
      Reply

      I’ve been there! And yes, it makes it easier on everyone to set the expectations up front. That way there are no misconceptions AND you can stay profitable!

      By they way, good looking site – clean, simple and to the point.

      ~Brodie

  • computer services says:
    May 16, 2010 at 9:30 am
    Reply

    Thank you sir! :)

    When I first started my biz I didnt think about profit. I only thought of making loyal customers… and believe me it has worked. So now when I am established it makes sense to raise my prices and make some profit! :)

  • Enarcade says:
    May 18, 2010 at 7:51 am
    Reply

    Definitely not i have noticed that my impressions from US UK and AUS have increased and also my CTR has increased but my overall earnings have dropped a lot from adsense not sure why this is just a heads up for everyone else.

    I have moved onto a big publisher Valueclickmedia and i am making an extra $90 a month over adsense, guess it is because of the “Financial Crisis”

  • joomla templates says:
    May 18, 2010 at 9:39 am
    Reply

    Then best way to set your prices is to look at what your competitors are charging.

  • Deals says:
    May 19, 2010 at 2:04 pm
    Reply

    I think this is really a topic where you should find some balance. Of course, giving your services for free, especially as an entrant, sets customer’s expectations low and pushes their willingness to pay down. But it’s really hard to figure out the correct price for your services if you are new out there and customers don’t know about you…
    Striking the golden middle is what I always try to do :)

  • Camille says:
    May 27, 2010 at 1:00 am
    Reply

    Great article. This is so true. If people start off getting a product for free they are going to expect it to always be free. People don’t want to spend money if they don’t have to, and if you start charging them they will be upset and will move on to a different provider of the product. Additionally if your product starts off as free some people interpret it to mean that the product is “cheap” an image that you DO NOT want to have associated with your product.
    If your product is good, charge for it.

What do you think?

DOFOLLOW BLOG RULES:
1. You MUST put your name somewhere in your post OR it will be marked Anonymous.
2. Comments and websites are manually reviewed and subject to approval.

Comments (have something useful to say in proper English)