One of the most challenging aspects of starting a business is figuring out how to price your goods or services. If you’re going to be a retailer, it’s fairly easy to assess what market prices are in your market. In other business? Not so easy. Initially, you need to test the market, and you need to understand what buyers value.
I always enjoy posts from Reuben Swartz of the Dollars and Sense Pricing Blog. A recent post of his says, “If a tree falls in the woods and no one hears it, does it make a sound?
If your offering has value that customers don’t perceive, can you
charge for it?”
This is where pricing and marketing are tied together. If you believe you are offering exceptional value over your competitors, you need to make sure people are aware of it. This is what marketers call your “value proposition”. It won’t persuade everyone — value is in the eye of the beholder. But be clear in all your communications what value you are making available to potential buyers for the price you charge
A value proposition is:
A simple statement indicating the target audience, the basket of benefits you offer, and the price for those benefits.
Here’s a hypothetical example:
Our distribution services enable small business owners anywhere in the U.S. to match large-company delivery times at just pennies more per shipment.
Put aside a little time and think what your own value proposition is. If your value isn’t perceived as worth your price, rethink either your offering or what you’re charging for it.