- Is your price too low?
We often see managers and business owners pricing too low. The result is simple, you are leaving money on the table and the volume doesn’t compensate for the loss in margin. This is so common because we all try to be competitive, maintain an affordable image, or simply fear the competition.
- Is your price too high?
We see this as well, though not as much. Pricing too high may result in more than just losing customers, but may create a situation in the market where your competitors take a significant bite into your market share.
- You focus on the product / service, not the customers’ need.
This is considered a marketing / sales issue but it tightly binds with pricing. You and your team need to know how to communicate your value to the customers using the topic they care about the most, themselves.
If you talk about your product, you may think it is very interesting, but your customer may already be thinking about that other offer.
- Pricing based on the competitors’ price.
This is a common one in hospitality, art (especially jewellery, photographs, and paintings) but also with any competition-based market.
Being aware of the market is never a bad practice, but in many cases it results in loss of revenue due to mistakes in value perception and capture.
- “All my customers get the same resource allocation”.
This is initially a common one with freelancers trying to please everyone and “be fair”.
Although not perceived as a pricing issue per se, this is a major reason for profitability issues, as well as productivity and even mental stress.
As much as it may sound strange, not all your customers are equal. Some are worth more than others. More revenue, and more allocation of resources.
We can advise on the right pricing strategy to make sure all your customers get their fair share of resource proportionate to their contribution to the business.
Since pricing mistakes is a fascinating and quite extensive topic to cover, we will get more posts on this soon.
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