One of the most difficult, yet important, issues you must decide as a your business is how much to charge for your products.

As with everything, it does not take rocket science to get this right, however one slip could seriously damage your bottom line.

The three factors of pricing, equally weighted are as follows:

• Your own costs and profit requirements
• Your competitors’ prices for identical products
• Your customers’ expectations and calculation of value

What follows below, is a set of values you should find out before you get to the final price you will charge:

• Pricing Minimum – you will get this from your accounts by summing up all the costs (both variable and non-variable) needed to deliver a particular offering to your customers.
• Competitors’ Price – for information about your competitors’ prices, you might want to get do a bit of analysis of the market.
• Value Perceived by Customers – if you have time, you could do an overall survey among your customers, asking how much they value your services – how much would they pay for particular products if they could set the price. If you don’t have time to do exhaustive research, try to at least ring a few customers and get their views.
• Final Price – with the data you got so far, you should be able to decide whether you will change your price or not.

Now you can see the gaps for possible increase in how much you charge.

A price comparison is very important for companies! I recently did one for a company who shall remain nameless and they were doing okay in sales, but there was room for improvement so they came to us and asked us to see what they could do better.

I had a look at different avenues and looked at what they were charging for there product, which really is what determines if someone buys a product or not, price is very important in determining this as people like value for there money.

I compared what they were charging and what there main competitors and a few other foreign companies were charging to get a feel for what people pay in different areas etc,

I found that our client which was Irish based and selling to the UK Market was selling well over what any of their competitors were charging so price in this case could have been the end of them.

I let them know of this and they are back competing with the big boys of their sector. Irish companies can sometimes charge more than their over seas competitors as they price in accordance with what people pay in Ireland in this company’s case they had to be competitive as there is more competition in the overseas market.

Based on my experience here is what I have found out: which could be useful for you.

• Look at the prices of your competitors
• Look at your own prices
• Price them in accordance with your market and what your competitors are charging.
• Review and lower in case you are not been competitive

I believe this can help your company very much so. However, if you are looking for a more handson approach, have a look at value based pricing services.

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