Article written by Jannie Rossouw, Head: Sanlam Business Market
In a competitive market environment business owners are prone to sell themselves short, because they do not take the time to determine a fair and justifiable price for their services and products.
There are so-called “value drivers” that support the charging of a premium for your service or product, if:
- It solves an expensive problem for the client.
- It saves the client money.
- It increases the client’s turnover/profit.
- The demand for your service/product is high and there are only a few providers.
- You have a good track record with regard to delivery.
- You provide good warranties.
You can also consider the following pricing alternatives:
- Per hour.
- Per project.
- Per unit.
- Per solution.
- Per result.
- A “freemium” model – provide a basic solution for free, but charge a premium for greater functionality.
- Based on volume (use a sliding scale for a volume discount).
The following factors can also influence your pricing strategy:
- The price and value offering of your competitors.
- The market trends within your industry.
- The value your product/service has for a client.
- The difficulty of the work that must be done.
- The resources necessary to complete the work.
- The expected time frame within which the work must be completed.
“Pricing is actually a pretty simple and straightforward thing. Customers will not pay literally a penny more than the true value of the product”.
Ron Johnson (American Businessman)
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