In business, people don’t buy your product just because it’s high quality. They buy it if it helps them solve a problem or achieve a goal. So, your price should reflect how valuable your product is to your customer, not just how much it cost you to make.
In the following I will give you an overview about:
How should we do it better in 7 steps
based on the book of Financial Discipleship - Work by Peter J. Briscoe.
1st Step:
It’s good to know what value-based pricing is. Value-based pricing means setting your price based on how much your customers think your product is worth. To understand this, you should compare your product with what others are offering. Ask these questions: What does the competition offer? Is one product better or more useful than another? How well do products work compared to each other? Do you provide any extras, like better service or fast delivery?
2nd Step:
Talk to your customers to understand what they want and need. Ask about their goals, problems, and expectations. This will help you know how much they are willing to pay.
3rd Step:
Know your product and competitors. To keep your prices strong and fair, understand your product well and compare it to what others offer. Once you know your price is fair, don’t lower it easily. If someone asks for a discount, be ready to explain why your price is worth it.
4th Step:
Understanding what your customers want. If you know your customers well, you can make smart pricing choices. For instance, a petrol station in a neighborhood might keep snack prices low to get more people to come in, while a station on a busy highway could charge more for the convenience of being there.
5th Step:
Study your competition. Check how your prices compare to others. If your prices are too high, you might lose customers. If they’re too low, you won’t make enough money. Decide if your product is better and worth a higher price or if you need to lower prices to compete. Only match a competitor’s price if your product and service are very similar.
6th Step:
Be smart about pricing. Instead of marking everything up the same way, keep prices low on items people buy often and higher on items they buy less frequently. This keeps regular sales coming in and helps you make more on less common purchases.
7th Step:
Fair pricing strategies. Sometimes, businesses charge lower prices to attract people, then make money on other things. For example, cinemas sell cheap tickets but make a profit on popcorn and drinks. Airlines and hotels also charge extra for things like better seats or special services. This is fair if people paying more get more. But it’s unfair to charge different prices to different people for the same thing.
In short:
Understand what your customers need, know what your competitors are doing, and be smart about your pricing. This will help your business grow and make more money. I hope it helped you to understand better how pricing is working and how to do it better, what do you need to change in your method.
Kamilla Budai
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