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PRICING YOUR PRODUCTS CORRECTLY IS CRITICAL IF YOU WANT TO STAY IN BUSINESS

There is no mystery about the fact that you need to make a profit when you run a small business, but what eludes some small business owners is the knowledge on how to price their products.

I remember many years ago when I was early to the retail trade and I wanted to run a special.  I had products that I had paid $10 for, marketed up 40% to $14, and without working out the price thought I would sell the items and cost and took off 40%.  Silly me, that meant that I was selling the product for $8.40.   Such a simple mistake, but one as a business owner you could not afford to make too often.

So many times I have seen products priced incorrectly through either lack of math knowledge, not concentrating on the job at hand or lack of knowledge. 

I remember talking to one giftware retailer one day who said they mark up 110%.  I was rather taken aback until she explained that they have to run so many sales to compete that if they did not mark up that much initially they would not be able to give attractive discounts.  It then started to make some sense because they were in a shopping mall competing against the big corporates.

When pricing your products you need to give some thought to the costs of running your business, the turnover you need to make, the client base you are attracting, the volume of stock turnover you have, the originality of the products you sell and other influencing factors.

Consider all these points when working out your pricing strategy.

 Kaye Dennan

Tags: discount pricing, how to price your product, how to price your product or service, price your product, price your service, Product Pricing, promotional pricing, purchasing price, value based pricing

This entry was posted on Thursday, March 26th, 2009 at 8:22 am and is filed under Marketing, Small businesss. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.