Establishing a pricing system that works well is tricky.
Not only do you have to account for the myriad costs that go into making your product or service exist, but you’ve also got to provide it at a price that is appealing enough to lure prospective customers away from the competition.
The most immediately effective method of gauging what you ought to be charging is to go online and scrutinize the competition’s rates. If you’re a product-based business, then it’s thoroughly worth investigating Twenga. It’s an Australian based, consumer-oriented shopping search engine that takes the Amazon approach to product coverage, endeavouring to incorporate everything. If you are selling a product in Australia, then the likelihood of your competition being on this site is very high, making it a reference tool that is too comprehensive to ignore.
If you run a business that specializes in electronics, then Static Ice is a good place to start. It’s one of the largest price comparison sites in Australia, incorporating data from 260 retailers in its search engine.
If you are providing services, take a similar approach to freelance sites like Elance and Guru. Doing this will not only give you an idea of the quality and cost of local competitors, but will also provide a fair indication of the possibilities outsourcing might be offered to your prospective customers, and how you should price accordingly.
If the comparison method doesn’t give you a sound enough idea of what your business should be charging, there are a couple of simple tools available online to help you establish this. CSG Network, Business Coach, and About.com all offer simple, excel based pricing guides that would be useful for rough estimations, but Snap Virtual Associates offers the most comprehensive tool that we’ve encountered. Their site features a step-by-step .pdf on the ways to establish and justify pricing for small businesses as well as a spreadsheet that incorporates various costs into your product pricing as well as anticipated profit margin, desired personal income, workload and vacations. Pretty clever, huh? Free, too.
If you happen to be an exporter, Austrade has a particularly pertinent eight-page .pdf that details the various pitfalls to avoid and aspects to consider when pricing for export.
And remember not to price yourself too competitively. Your business, product, and services are worth something, so your pricing should reflect that. #