Value is more expensive than price. ~Toba Beta
Making the decision to change your pricing is stressful for everyone. But pricing your products and services right is a key to success for any small-business owner. The stress comes from fearing that charging too much will turn customers away while knowing that pricing too low is shorting your revenue.
So how do you know when your prices are just wrong and a change needs to be made? Here are five tell-tale signs it’s time to change your pricing you can rely on.
1. Your competitors are charging more for inferior products.
Undercutting your competitors does not always win customers. People make buying decisions based on perceived value. Which means if what you are offering is superior, you need to reflect that in the price. Lower pricing simply says you don’t believe in the value of your own offering. And if you don’t believe it, why would a prospective customer?
2. Every price you put on your products and services is negotiable.
Sales and promotions have a place in your marketing plan and you may want to provide flexible pricing for your most highly valued, loyal customers. But if you let every customer talk down your price and automatically lower it because you fear losing the customer you are, in fact, disrespecting yourself as well as demeaning the value of what you sell. This is bad for business as well as your self-esteem.
3. Your cash reserves are frightening low.
Steady cashflow is every business owner’s dream. But rarely their reality. So, if you are keeping a close watch on your bank account and coming up empty on a regular basis, ramp up your marketing before ratcheting down your price.
It could be your expenses are growing faster than profits. It could be you are not doing enough to get on the radar of your prospective customers. Cash-related challenges are an indicator you need to market more and should consider increasing your prices.
4. Your customers are always asking for discounts.
When you find yourself constantly defending your prices and fielding numerous requests for discounts, it can be a sign you need to consider using a different pricing structure. This could be an ideal time to change your pricing strategy to reflect different options and price levels packaged in a good, better, and best pricing offer. This technique provides customers with a range of flexibility that increases their perception of affordability.
5. Your business is mainly attracting freebie seekers and bargain hunters.
When you price too low you tend to attract a disproportionate number of people who are either high maintenance or low appreciation customers. Sometimes both. These customers will suck your life and business dry if you let them.
Get over your “disease to please” and focus on attracting people capable of recognizing value who can realistically afford what you are selling. Just say “no” to the rest and continue to practice charging based on value, not price. It’s a habit well worth cultivating.