As a business growth strategist I am constantly asked to helped service providers with their pricing and packaging. I find myself surprised at how many essential items that are constantly overlooked when setting a price point. In fact there are certain stages that very crucial when setting up a proper pricing structure.
When starting out there are three common factors to consider.
- The cost to provide a service or product. This includes the labor, time and resources put together.
- The cost of your time as a service provider. This can also be benchmarked per industry depending on the service you offer.
- The mark up margin after evaluating your competitors and the value they offer.
Once your mark up is created you can identify your profit margin.
There are a few other pointer to consider when determining price points:
- If you are going to pitch higher always remember to educate your customers on the value you offer
- If you pitch low to beat out the competition this can also have negative consequences
- Pay attention to the competition and the value they offer
- Identify and research the industry you are in.