How to determine your price point
As I work with clients to create a business, one of the details that often gets a lot of discussion is: What should I charge? Most begin by under-pricing their product or striving to make it economical so customers will want to buy it. There a several reasons not to go this route, the first being that quality trumps economy and you will get better and happier customers if you make it clear from the start that you are focused on quality. Customers who are looking for a bargain can be some of the most difficult and frustrating to deal with.
To get a better idea on how to determine a reasonable and fair price, here are some things to consider:
- How can you create a package rather than a one time product? Rather than charge by the item, the service, the hour or some other variable, begin by creating a package. Think about everything you will offer and create something bigger, more valuable and more unique than the individual item. Notice how many of the things that you list in the package are things that you probably would do anyway but once you start itemizing them you not only call attention to the value but you increase the value in the clients eyes as well as probably your own. For example, instead of offering tutoring that you price by the hour, you offer:
- One hour of tutoring
- Worksheets and additional materials to extend the lesson
- Monthly report to parent that identifies strengths, areas of concern and progress
- Monthly parent session to coach parent on how to encourage progress
- What if you are selling a product instead of a service? How do you create a package? You can add value by identifying how your product is unique. For example:
- A jar of salsa
- Recipes and suggestions for using the salsa
- Create a trio of salsas: mild, medium and hot
- Add a bag of gourmet chips
- Sell the salsa in a unique container that is worth saving
- Include a gift wrap or gift bag
- Create a subscription where customers receive a jar a month
- What are your costs and/or expenses in order to create the product or service? Include not only materials but the cost of renting space, utilities, materials you may use to create the product, business cards, paying for training or certification, paying an employee or outside contractor etc.
- What is the time invested in creating or providing the service? Include the creative time to design and plan for the product or service as well as the actual time delivering it. Don’t forget the time spent in research, training, networking etc. Your experience also counts for something. If you are an educator providing tutoring and you have 20+ years of teaching experience, then you can charge more than a recent graduate.
Interested in building a business on the side? Want to create additional income while you work your day job? I can help! Check out my
Dream Achiever Coaching is well worth the time and money. Lynne is a wonderful coach! She offers priceless advice, encouragement, and support. She has personally helped reel me in to focus my time and energy appropriately and has also helped me achieve my dream of having an enjoyable, fulfilling, and successful business. Amy Molley, www.sensiblesensoryspaces.com/