Have you ever wondered how much your services are worth and whether to raise or lower the price?
A few days ago, PRISIER invited us to a conference led by its founder, Lina Maria Restrepo, where they explained how to set prices based on value.
Today, over 50% of businesses are engaged in a battle between competitive prices and the price that consumers are willing to pay, leading more entrepreneurs to ask themselves, “What should I do?”
Setting a price for our services is not a simple task. Selling cheaply is definitely easier, but when our company clearly understands the value of its service or product, its offering will have better demand in the market. Setting a price is not only difficult; it’s also complex for consumers to evaluate a service before they’ve hired it.
For this reason, the first question you should ask yourself as the owner or manager of your income is, “What is my differentiating value in the market? What about my service or product is truly attractive to my customer?” And from there, set the price.
It’s common for prices to be set based on the cost of the product and the time the service takes to execute, but prices should be set based on the value of the outcome, not the cost of producing it.
Today, there are four ways to maximize business profitability:
- Lower fixed costs.
- Sell more.
- Lower variable prices.
- Increase the price.
Improving fixed costs could increase income by 2%; increasing sales would increase income by 3%; reducing variable costs by 8%; but increasing the price of your product or service by 1% would increase income by 11%. Incredible, isn’t it?
Price is ultimately more than just a number, as it requires daily work to create sales strategies that actually work. It’s time for companies and small business owners to set the value of what they offer by understanding their customers and their needs.
What are you doing today to make your business or brand stand out from the rest?
