Top 3 Common Pricing Mistakes1. "cost-plus" pricing: set prices based on costs plus a reasonable margin. This strategy can lead to under-price and ,therefore, losing added value, as it does not take into account how the customer perceives and values your products and service. Furthermore, the impact of volume and fixed costs on the unit cost, can lead to prices greater than what the market is willing to pay.
2. Lowest pricing: using this strategy to gain market share leaves you in a fragile position against larger competitors with better financial muscle. It can lead to a price war were probably the small business will end out of business. Furthermore, it destroys value and alters the consumer's perception of it, so then it becomes increasingly difficult to be profitable.
3. Pricing to meet goals and Seal deals: These circumstances leave the salespeople at the mercy of customers who will: negotiate to get the lowest price possible, or wait for the last minute discounts to place their orders. This behavior destroy perceived value and leaves money on the table.
Setting your $1 Million pricing strategyWell, there are different ways to reach that million in sales.
Please don't misunderstand my point is not that we all sell units at $1 million, but why not? The point is that when whenever we are starting a new business, we must set our prices as high as possible. These prices should not only reflect the added value of our services or products, but also the perception of value of our customer, without exceeding the ceiling price of the market (the highest price the market will bear).
High prices allow our businesses not only to be profitable in shorter period of time but also to enhance customer knowledge. Since we have fewer customers, it is easier to know them better and offer services and products that fit their needs. Therefore, the company can be able to grow trough customer loyalty, which positively affects the company's brand, new purchases and market opportunities.
Do you feel closer to that million in sales?