What Is Your Product Or Service Worth?
In 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. Below are some pricing strategies you can use to determine the worth or price of your product or service.
1. Value Drivers
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
2. Pricing Alternatives
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)
3. Additional Factors
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).
The content in this article was provided by Jannie Rossouw, Head: Sanlam Business Market. Sanlam is a diversified financial services group, headquartered in South Africa, operating across a number of selected global markets.
For more information, contact:
Website: https://www.sanlam.co.za/Pages/default.aspx
Tel: 0860 726 526
Contact form: https://www.sanlam.co.za/contact/Pages/default.aspx
