Help! How should I price my products and services?

For freelancers, entrepreneurs, and small business owners, pricing products and services can be challenging. The bad news is: I can touch on it in this blog but the thinking out there is so diverse, I could never give you all the answers. But I can at least try to get you heading down the right path and maybe give you some ideas. And I’ll revisit this question from time to time.

Most small business owners know that pricing products and services too high will scare people away. After all, no one wants to spend too much on something when they can get the same thing for much less. Instead, most small business owners will charge too little, hoping that their lower price attracts buyers and eats away at the competition.

Neither of these strategies are good practices for about 80% of the market. A middle range price for your products and services is best. Here’s why:

• Low-cost provider is not always the best option. Low cost providers have to have a sharp eye on all expenses. And, their customer loyalty is out the window because customers who shop based on the lowest price will switch as soon as someone cheaper comes along. (And FYI: someone cheaper will come along sooner or later).
• High-cost provider can be challenging to deliver to expectations unless you are really reaching the luxury market with effective marketing and targeted publicity.

So find out what the price range of your products or services is and stay in the middle. Drop your prices slightly to give occasional incentives, but keep them in the middle.

It’s worth spending time online to find out what other people are paying your competitors for similar goods and services. Don’t be tempted to set your own prices based on a “thumbnail sketch” of prices. Spend the time. Chances are your prices will end up higher than you were expecting, so that research time pays for itself!

Being in the middle also addresses the issue of profitability: It’s actually the most profitable place to be! If your prices are too high, your profitability will actually be fairly low because you’ll have to work a lot to acquire just a few customers. And at the lower-priced tier, you’ll have little or no profitability when you cut your prices as low as they can go. So, you’ll enjoy a volume of customers at the mid-range level with enough built-in profitability to make it worthwhile.

Jessica Routier, IAC-EZ

Jessica Routier

Jessica wants to talk to you! She is who coordinates the contests, travels to all the conferences, and interfaces on a fun level with customers on a daily basis in order to bring our users together as a community.

Jessica has a B.Admin and an MBA. Her background in business, along with a diverse skill-set (including a diploma in Medical Transportation, retail experience, and experience as a paralegal) make her a valued, highly flexible team member.

Follow Jessica on Twitter Follow IAC-EZ on Twitter