{"id":276292,"date":"2015-09-30T05:05:43","date_gmt":"2015-09-29T19:05:43","guid":{"rendered":"https:\/\/content.easyweddings.com\/au\/pro-education\/set-pricing-products-services\/"},"modified":"2015-09-30T05:05:43","modified_gmt":"2015-09-29T19:05:43","slug":"set-pricing-products-services","status":"publish","type":"au-pro-education","link":"https:\/\/www.easyweddings.com.au\/pro-education\/set-pricing-products-services\/","title":{"rendered":"How to set pricing for your products and services"},"content":{"rendered":"<p dir=\"ltr\"><strong><span class=\"il\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4371\" src=\"https:\/\/assets.easyweddings.com\/files\/2022\/02\/23155800\/how-to-choose-your-pricing.jpg\" alt=\"how to choose your pricing\" width=\"2124\" height=\"1413\" title=\"\"><br \/>\nBy Phil<\/span><a href=\"http:\/\/www.thebiggergame.com.au.\" rel=\"nofollow noopener\" target=\"_blank\"> Owens, Corporate Behaviourist and business coach. <\/a><\/strong><\/p>\n<p class=\"lead\" dir=\"ltr\">Legend has it that Pablo Picasso was sketching in a cafe when a bold woman approached him.<\/p>\n<p dir=\"ltr\">\u201cIt\u2019s you \u2014 Picasso, the great artist! Oh, you must sketch my portrait! I insist.\u201d<\/p>\n<p dir=\"ltr\">So, Picasso agreed to sketch her. After studying her for a moment, he used a series of elegant pencil strokes to create her portrait. He handed the women his work of art.<\/p>\n<p dir=\"ltr\">\u201cIt\u2019s perfect!\u201d she gushed. \u201cThank you! How much do I owe you?\u201d<\/p>\n<p dir=\"ltr\">\u201cOne hundred thousand Pesetas,\u201d the artist replied.<\/p>\n<p dir=\"ltr\">\u201cBut, what?\u201d the woman sputtered. \u201cHow could you want so much money for this picture? It only took you a minute or two to draw it!\u201d<\/p>\n<p dir=\"ltr\">To which Picasso responded, \u201cMadame, it may have taken only a moment to draw it, but it took a lifetime of study and practice to do it in that time.\u201d<\/p>\n<p dir=\"ltr\"><strong><em>How do you set your pricing for what you do?<\/em><\/strong><\/p>\n<p>Pricing is a critical issue in business and getting it wrong has been the reason many businesses have failed.\u00a0 There is more to setting a price than picking a number &#8211; using a strategic approach can ensure you maximise your return and build a business that lasts.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-4369\" src=\"https:\/\/assets.easyweddings.com\/files\/2022\/02\/23155807\/how-to-set-your-pricing.jpg\" alt=\"how to set your pricing\" width=\"2122\" height=\"1415\" title=\"\"><\/p>\n<h2><strong>The difference between value and price.<\/strong><\/h2>\n<p>Our customers experience value, and pay the quoted price.\u00a0 If we are scared to set a price for what we offer, our customer may never truly value it.\u00a0 When we <span class=\"il\">sell<\/span>, we only <span class=\"il\">sell<\/span> on price if we have not been able to demonstrate the value.<\/p>\n<h2><strong>How to set a price:<\/strong><\/h2>\n<p dir=\"ltr\">Here are a series of questions that can help you define on what price to set:<\/p>\n<ul>\n<li>\n<p dir=\"ltr\">What are my costs?\u00a0 Not just materials, but all other fixed and flexible costs involved in delivering the product or service the customer.\u00a0 It is not just the \u2018materials\u2019, but also consider the time, the equipment used and the share of the costs of running the business that should go into each transaction.<\/p>\n<\/li>\n<li>\n<p dir=\"ltr\">Who is my customer (the person who pays for it)? What do I know about them, and what do they want to achieve?<\/p>\n<\/li>\n<li>\n<p dir=\"ltr\">How is the product or service experienced and consumed?\u00a0 What experience are people after, and what are the alternatives available?<\/p>\n<\/li>\n<li>\n<p dir=\"ltr\">What competition &#8211; direct and indirect &#8211; do you have?\u00a0 Direct competition comes from those businesses that offer the same product or service as you.\u00a0 An indirect competitor offers a product that can be used as a substitute to get the same outcome.\u00a0 If I am the owner of a winery, other wineries are direct competitors, whilst a beachside resort may be an indirect competitor.<\/p>\n<\/li>\n<li>\n<p dir=\"ltr\">What differentiates what you offer from the competitor (what makes you special), and what are their price points for what they offer?<\/p>\n<\/li>\n<li>\n<p dir=\"ltr\">What are your capabilities?\u00a0 What is it that you offer, what is your support and service like?\u00a0 Really understanding what you have is really important in setting a price.<\/p>\n<\/li>\n<li>\n<p dir=\"ltr\">What is happening in the market &#8211; is there a lot of demand?\u00a0 Do customers have money to spend, or is there pressure on them to save money?<\/p>\n<\/li>\n<li>\n<p dir=\"ltr\">Do you charge by the hour, or for the experience they receive?<\/p>\n<\/li>\n<\/ul>\n<p>Once you have answered these questions, you should now have the insights to set your price strategically.<\/p>\n<p>An important issue is your brand.\u00a0 Like when you walk into the supermarket, you have the ability to buy home brand jam, standard brand jam, or the deluxe brand of jam, probably in the fancy jar.\u00a0 They all contain jam, but what sort of jam is your business?\u00a0 How do you want to be seen &#8211; and how do you want your customers to reflect on your brand (which shelf do they imagine you sit on?)<\/p>\n<p>In one business, we changed what they offered from $499 to $1499 and the <span class=\"il\">sales<\/span> really took off.\u00a0 At $499 people thought what they were offering was cheap &#8211; at $1499 people thought what they offered was both good value and reasonably priced.\u00a0 It was a price that reflected a higher quality product &#8211; one that they wanted to be associated with.<\/p>\n<p>Too many businesses under-price what they offer, as they are \u2018scared\u2019 it will be too expensive for their customers.\u00a0 If you know your customers, you will know both what they expect to pay, and what they are prepared to pay, for what you offer.\u00a0 Sometimes raising your price is the best <span class=\"il\">sales<\/span> strategy you can have!<\/p>\n<h2>The price:<\/h2>\n<p>So, now you know what sort of brand you want (premium, standard or home brand), you know what your customers expect and are prepared to pay, and what else they could choose instead.\u00a0 Based upon these aspects, you can define a price range for your product and service.<\/p>\n<h2>Packages:<\/h2>\n<p>Giving people options can be important.\u00a0 This allows them to control the choice process, and not be forced into a single option (which can scare them away).\u00a0 This can be done by offering a range of packages at different price points for the customer to select from &#8211; with most customers likely to select the middle offer. \u00a0(Remember the jam in the supermarket?)<\/p>\n<h2>Discounting<\/h2>\n<p>Many businesses fall into the trap of discounting simply because a customer asks for it.\u00a0 Often, customers will ask for discounts on everything, whether they actually believe they can get it or not.\u00a0 If you have sold the value of what you offer, and believe the price is right, you can choose to hold the price steady.\u00a0 If you believe that you need to discount to secure the business, that is entirely your choice &#8211; but just be sure that you actually need to to secure the business.\u00a0 It can also damage your brand &#8211; premium brands rarely discount!<\/p>\n<div>\n<p dir=\"ltr\">Be careful that if you do discount that you know your bottom line &#8211; you are a business, not a charity, so discounting below your true cost is the fastest way out of business.<\/p>\n<h2>Test<\/h2>\n<p dir=\"ltr\">In the end, the proof is in the pudding.\u00a0 If you have set the price appropriately, and you present the value to the customer with confidence, you will find out how often price is a \u2018deal breaker\u2019 (as opposed to a <span class=\"il\">sales<\/span> objection!).\u00a0 THis can help you adjust the price point to the proper level (often upward!) to hit the sweet spot that represents value to the consumer and reflects your brand and capability.<\/p>\n<p dir=\"ltr\"><strong><span class=\"il\">Phil<\/span> Owens is a Corporate Behaviourist and business coach. \u00a0You can read more from him at\u00a0<a href=\"http:\/\/www.thebiggergame.com.au\/\" target=\"_blank\" rel=\"noopener noreferrer nofollow\">www.thebiggergame.com.au<\/a>.<\/strong><\/p>\n<\/div>\n","protected":false},"author":1,"featured_media":269026,"template":"","au_pro_edu_tags":[],"class_list":["post-276292","au-pro-education","type-au-pro-education","status-publish","has-post-thumbnail","hentry","au_pro_edu_categories-sales-tips"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.easyweddings.com.au\/wp-json\/wp\/v2\/au-pro-education\/276292"}],"collection":[{"href":"https:\/\/www.easyweddings.com.au\/wp-json\/wp\/v2\/au-pro-education"}],"about":[{"href":"https:\/\/www.easyweddings.com.au\/wp-json\/wp\/v2\/types\/au-pro-education"}],"author":[{"embeddable":true,"href":"https:\/\/www.easyweddings.com.au\/wp-json\/wp\/v2\/users\/1"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.easyweddings.com.au\/wp-json\/wp\/v2\/media\/269026"}],"wp:attachment":[{"href":"https:\/\/www.easyweddings.com.au\/wp-json\/wp\/v2\/media?parent=276292"}],"wp:term":[{"taxonomy":"au_pro_edu_tags","embeddable":true,"href":"https:\/\/www.easyweddings.com.au\/wp-json\/wp\/v2\/au_pro_edu_tags?post=276292"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}