Business owners face many challenges in this changing economy. In order for your company to be successful, you not only need to provide a product or service which prospects and clients find valuable, but it must also be affordable. Unless your business caters to clientèle that are unaffected by the recession, it is important to review your pricing strategy to ensure you are not losing business to your competitors. Chances are once your cleints find another company that meet their needs at a price they can afford, they will not magically return when the economy rebounds. The following tips can help you price your product in a way that helps your business not only make a profit, but remain competitive.
- Pretend you are the client – As business owners or managers it is easy to become so engrossed in the “numbers” that you forget to consider the needs of your client. From a business standpoint you may price your product based on your own financial goals or quotas. Your client has little concern over the success of your business and is interested in obtaining a product or service at a price that they deem provides maximum value. In addition to asking, “what price will return a profit?” you must also consider the value you can communicate to your clients in regards to your products and services, and what ultimate price theu would be willing to pay to receive this value. Know your prospects, their needs and their financial situation and sell on value to set prices accordingly.
- Understand your competition- The recession has caused a shift in consumer spending. As more people battle debt, decreased savings and uncertain financial futures, they are paying close attention to where they spend their hard-earned cash. This means your clients are not only looking at the price of your products and services, but also those of your competitors. You should do the same in order to insure you differentiate yourself and remain competitive. If your competition is providing similar products or services at a much lower price, you must be able to respond to this through a value proposition compelling enough to close your clients on your services. If this becomes increasingly challenging, you may need to reconsider your target market, prospects (find technology-strategic and technology-dependent ones), deliverables and sales technique.
- Reward loyal clients - In an attempt to drum up new business many companies offer lucrative introductory prices to get people in the door. While this may lure new clients to your company, your value to their businesses will determine how long they stay. Remember to reward your loyal clients by offering discounts, incentives or special offers on additional products and services in appreciation of their business.
- Higher quality brings higher prices – Quality products and superior service can set you apart from your competitors. Your prices should reflect this elevated position within the market. The recession has certainly changed the way people are spending money, however consumers will always pay more for higher quality products whenever possible.
At the end of the day, you must determine a price that reflects the value of your service in addressing the needs of your clients while at the same time generating profits for your company. If you fail in communicating your value proposition effectively, and your prices are percieved as being too high, you risk alienating prospects, and if your prices are perceived as too low your company will not thrive. Navigating the gray areas of pricing is an art that every successful business must master.
MSP University helps Solution Providers succeed…period.