Setting the Right Price, Setting the Right Tone

Setting the right price is not an easy task. Yet, this is what will have your customers come to buy… Or run away. There is a common feel that pricing systems are based on some kind of complex mathematical process. The truth is, setting the right price is more about common sense than it is about heavy calculations. So, don’t rush the exercise, take a pen and a paper and get ready.
Remember, setting the right price will set the right tone.

Know Your Costs
How much does your product or service cost you? You should have on hand a detailed spreadsheet of your costs and fixed expenses. This includes everything from the rental of your business space, electricity, water, recycling to advertising, salaries and costs of production. Once you know how much one hour of your time or one item is costing you, you will be able to evaluate what is the lowest price you can market it for.

Don’t Forget The Brand Value
Once you know what price will be enough to cover your costs, try to evaluate what is the value of your brand. If you are a highly skilled stylist, with previous experience in fashion magazines and international brands, who are now offering her services as a fashion consultant, include your background and expertise as an add-on to your fee.

Check Your Competitors
It seems old-fashioned but walking the streets and looking at what competitors price similar items or services, will give you a good base to work on. Do your research, make some phone calls and find out what is the average price offered to your target market for similar items.

Don’t Go Too Low
A very interesting article Real-Life Lessons in the Delicate Art of Setting Prices published in The New York Times highlights how pricing items or services too low does not always lead to extra customers. Prices are associated with value, the higher the quality of your product, the more you can expect for it. If you can convince your customers that what you are offering is of quality and uniqueness, if your customer service is irreproachable, then don’t be shy and set your price accordingly.

Tell The Story
Sometimes there is a story behind the price tag, and if you do have one, remember to tell it to your customers. Are your bags made out of recycled material? Is part of the profit from the flower seeds you sell going to charity organisations? If you have a story, share it with your customers. People are more inclined to pay a little higher if they know the reason why. More so if it is a beautiful story or a charitable cause.

Set The Tone Right
Once your price is set, then you will have to justify it. Make sure that your customer service is right and that the quality of your product or service is impeccable. Set the right price, set the right tone and you will keep your clients for life.

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