Nothing seems to send some of our clients into a spin faster than having to set prices for a new product or service. We think pricing is central to selling (….well duh!), but often the first area where pricing and sales intersect is the business owner’s confidence in their ability to sell at all. A worry that no-one will agree to pay a certain price can cause people to massively undercharge for their time; this can start a massive spiral for businesses, where the amount they have to sell to break even becomes an impossible task.

Clearly there aren’t set rules for pricing…. but there are few guidelines which we think apply to the majority of businesses.

The price you charge should cover your costs and leave some profit (this means you need to include all the costs in your decision making, travel, research, marketing…… and yes, even your time).
A lot of clients and customers are value-sensitive not price sensitive – being cheapest won’t always win.
The better able you are to cover your costs in each sale the less selling you’ll need to do (a great thought if fear of selling is driving your prices downwards).
If you want to charge more than your competitors you need to be offering more than they are….. if you want to charge the same as your competitors it will be an easier “sell” if you are offering more than they are…… if you are charging less than your competitors and still offering more than they are… you’ll need to stack your case with evidence, otherwise customers may think it’s too good to be true.
Long term relationships with repeat customers are where the main profit is for lots of organisations… this means that you can afford to do deals or offers to acquire a new customer but you need to do this in a way that doesn’t set a damaging precedent for future sales.
Your customers are smart – black magic pricing won’t fool them and may damage trust, however they will understand pricing models which make sense – for example lower prices for regular or long term work.
If someone doesn’t value your product or service at the price you are offering it….. they may not be your customer.

How has your approach to pricing changed as your business has evolved?