Archive for

6 Factors to Consider When Determining How to Price Your Products and Services

Many entrepreneurs in the planning stages of launching a business struggle with determining how to price their products and services. In fact many entrepreneurs go into panic mode furiously stalking their competitors and opting to undercut them on pricing instead of the better option of setting pricing based on value.

So how does one go about properly pricing their products and services?

Well there are 6 factors to consider and having a complete understanding of each will help you to eliminate any questions surrounding your pricing.

#1 – Economics of One Unit

Simply put you need to know what it costs you to produce one unit of (insert your product name here). If you sell cupcakes you should have a full understanding of what it costs you to make one cupcake.

How much do you pay for flour, sugar, eggs, milk, chocolate, sprinkles, cupcake packaging, etc.?

How much does that yield? Let’s say 1 package of flour and sugar, 1 carton of eggs, 1 gallon of milk etc. will allow you to make 100 cupcakes.

Take the cost (for example $20) and divide it by the number it yields (100) to get your cost per unit ($0.20)

So if it costs you 20 cents to make one cupcake this is the base number in which you use to determine pricing.

#2 – Associated Costs

So it’s not as cut and dry as producing a cupcake for $0.20 and selling it for $1.00 to make $0.80 profit per cupcake. You also need to know what your associated costs are such as renting the commercial kitchen, advertising, employee wages, marketing, your salary etc. and use those numbers to determine how many cupcakes you need to sell each month to cover expenses (and make a profit).

#3 – Competitor Pricing

Don’t panic. Yes, you want to have at the bare minimum, an idea of what your competitors are charging BUT it does not mean you have to compete on price or Heaven forbid (gasp) charge lower than your competitors.

In fact for most businesses it’s not recommended you compete on price. Instead conduct research on your competition to determine where you stand out and what makes you different.

Perhaps you have a streamlined process or you use organic ingredients or you offer delivery or you have an online ordering system. Whatever it is, find the areas in which you exceed the competition and use it to justify your pricing.

#4 – Quality of the Goods

Having a high-quality product or service goes without saying. Even if you justify charging more for your products or services, if the quality is no good you will be inundated with returns, complaints, and the worst of the worst – negative reviews on social media.

If you are unsure if the quality is any good the one way to determine this is to sell a few units and ask for feedback. This does not, I repeat, this does not mean to sell something to your Mom or other loved one who is:

1. Not your target market and

2. Too attached to you personally to give you constructive feedback.

#5 – Benefits to the Consumer

The benefits a consumer can expect to receive as a result of purchasing from your company must be clear and measurable. Having a good understanding of what your customers pain points are and how your products or services are the perfect solution can go a very long way in helping you to set pricing.

Take my company for example, when is the last time you woke up in a cold-sweat thinking “OMG! I need some market research like now!!” I’m guessing not ever.

You see I understand that my clients are not looking for market research, they want validation that they have a good idea for a business and that before they invest countless dollars and hours to bringing the business to the marketplace they really do have a chance at being successful.

So the market research data I provide gives them peace of mind. And really what price can you put on that?

#6 – Confidence

Confidence could almost be the only factor listed because this is where I see entrepreneurs struggle the most. You doubt yourself, you doubt your abilities, you doubt whether or not what your selling is good enough, etc.

With all of that doubt piled up you then start reducing your fees until you find yourself almost giving away your products or services for free. Now you are not making enough to cover your expenses and you are starting to resent your business and not long after that you close up shop and head back to (cringe, gasp, shout, cry) a j-o-b.

Determining how to price the products and services for your small business is as much an art as it is a science. In the beginning it will take some market research and a little bit of trial and error and by considering these six factors you will be in a much better position to get it right sooner.

A Look at Direct Mail and Online Marketing for Small Business Marketing

Marketing and advertising plays a vital role in every small businesses. The fact is its important for the business owner to understand the need of his clients and formulate a strategy which will support those people needs. Marketing and advertising for any small business establishes the desire of the owners to grow and broaden their products or services. The use of junk mail and the web provides great opportunities to see organic growth of a small business. The following article looks at direct mail and online marketing for small businesses to reach a wide audience in cost effective and efficient ways.

Letterbox Mail

Letterbox deliveries is one of the best performing mediums of marketing for small business. It is competent at reaching an a number of buyers for only a few cents per letterbox. Radio, paper and television may perhaps be a pricey and hard to organize ways of advertisements for small business owners. To ensure that your advertising and marketing really creates increased traffic and plenty of attainable gross sales, you can look for firms that supply letterbox delivery within given areas. Specify your audience and organize letterbox circulation within each of those communities. Many businesses are offering cost efficient publications, circulation and design packages to cover anything from thousands to millions of catalogue delivery. For substantial circulations, it just takes a small number of responses to make the mail promotion profitable and get a return on investment.

Digital Marketing

When marketing for your small companies, typically the most popular method at the moment is through the net. Most small and large business entrepreneurs employ online advertising and here they try and give a discount for their consumers. This is a practical, easy approach to target the buyers needs regardless if see them in person or not. To get easily connected, you have to come up with an detailed site where people can look for your goods and services offered and your contacts and summary profile about your business. Your website should be used as your major point of contact on the net for your business. Internet promotion for the business is an effective and convenient solution to invite and interact with prospects. If you are a small business owners, you will want to think of effective methods or approaches to interact with prospects on-line. There can be various firms that can offer to get you more prospects through growing your online attractiveness.

Combine Direct Mail and Web Marketing

Another great approach in promotion for an enterprise is to set up a well-round strategy that combines print and website marketing. Taking this process allows you to cover just about all basis of where you are very likely to get in touch with your prospects. While a large number of people are on the net, there is still a great number who check out their mail. Combining mail and website marketing allows you greater opportunities to connect with individuals who may not find your enterprise within only one medium.

Work with other community merchants to co-promote your businesses with direct mail. This minimizes the expense of performing a letterbox campaign while still getting yourself a huge exposure in a great number of houses.

Afterwards, apply website marketing including social websites, search engines and internet mail to contact those same audiences using a regionally targeted method. If you co promoted with other businesses using mail, you can work together online also. Ask your partnering enterprises to promote your small business on their web updates, email address catalogues or back link off their site to your site while you do the equivalent for them. This further allows you to get through to prospects you may not generally have accessibility to exclusively.

Combined direct mail and internet for marketing a small venture involves creativity and partnerships to make your promotion go very much further in access as well expenses.

Use the combination of mail and the internet for great effect to grow your business and give it better exposure.

Consider Investing in the Avaya IP Office Business Telephone System

The Avaya IP Office business phone system was created with small and medium sized businesses in mind. The overall goal of the system is to allow employees, managers and customers to connect and collaborate with each other in real time, removing any limitations, using whichever modes of communication and devices that they choose, with laptops, home phones, mobiles, smart phones and office phones included in the mix. The system offers a high level of compatibility and users can choose IP, digital, analog or SIP technology in any combination, allowing both flexibility and integration with current equipment to keep costs down. The IP Office can also interoperate with more than 2 million other Avaya systems worldwide.

This futuristic vision is made possible by the IP Office telephone system which delivers tools and services that allow advanced collaboration, from basic telephony functionality through to sophisticated and powerful unified communications. What’s more, the IP Office is an ideal choice for new flexible ways of working that are common to more modern businesses, such as utilisation of homeworkers and support of mobile workers. Features are supplied that support specific user roles, from receptionists to customer service staff, from office workers to on-the-road salesmen. The system is also super-flexible, accommodating a company’s needs whether they are a small start-up business or a multi-site national conglomerate. Each system can support from 5 to 1000 employees per site, with up to 32 different locations networked together.

Whatever industry it is applied to, the system works with the business to increase both business and customer service efficiency, with highly customisable options, a high level of flexibility and full scalability to meet a businesses’ changing needs. Optional features add further functionality to support specific ways of working. For example, optional Radvision Scopia allows desktop and remote voice, video and data conferencing, wherever you are, and the Avaya Flare Experience allows your favourite communications tools – instant messenger, video, e-mail, phone and social networks – to be at your fingertips in a single unified enterprise network. Of course these are optional extras – the system works very much that way, so you don’t pay for anything you won’t make good use of.

Worth a final mention, the system makes management of communications so easy. Multiple sites can be managed and served from one location, saving both staff costs and travel costs. Advanced track, record, and report functionality on all calls allows supervisors to monitor and build optimal customer interactions.

There are more than 300,000 IP Office business phone systems installed worldwide, making the IP Office the leader in unified communications for small and medium sized companies. It’s not surprising that the IP Office was awarded Unified Communications Product of the Year (2011) from both TMC (Technology Marketing Corporation) and Frost & Sullivan.