Get Serious About a Crucial Aspect of your Business: Pricing!

The MIT Sloan Management Review found out the following stunning statistic: “Fewer than 5 percent of Fortune 500 companies have a full-time function dedicated to pricing, according to data from the professional pricing society.”

We’re talking REALLY BIG companies that are neglecting a crucial aspect of profitability—price. Imagine what it’s like for small business owners! Most often, entrepreneurs set prices based on their own costs or on the prices of their competitors. While that’s one part of the equation, it shouldn’t be the entire data set to making price decisions. Ultimately, it comes down to the price/value relationship.

How much time/effort/ energy AND cost will your service save your client over the course of a year, two years, or five? How much topline revenue might your offering bring to your customer? Finally, what other areas of their business might they be spending money on and NOT getting the return they were hoping for that could potentially be diverted to support YOUR service?

Finally, we small business owners can spend an awful lot of energy keeping ourselves extraordinarily busy with projects that aren’t profitable. Believe me, I KNOW firsthand. You come to the realization that yes, there may a less experienced, less qualified, less astute person/company offering a similar service as yours at a MUCH lower price. Instead of lowering your price, take the time to figure out how to communicate WHY having a more experienced, more astute, more qualified service provider will end up being a bigger benefit in the long run—and stick to a price that will help you create a long term, sustainable business rather than just keep you busy right now.

Facebook Comments:

Leave A Reply (No comments so far)

The comments are closed.

No comments yet