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Tips for Pricing your Products and Services

When you’re first starting out as a new business, how do you know what price to charge for the products or services you offer? You want to make a profit, that’s why you started a business, but you also need to be realistic in what you charge, otherwise people might not buy. It’s a tricky balance to master between covering costs and making a profit if you want your business to grow. Here are some tips on setting the right price for your products or services:

 

  • Consult your Business Plan – Obviously, you started a business in order to make some money. Consider how pricing will affect your ability to grow and expand your business and plan accordingly.
  • Understand your Costs – As you should well know, it costs money to make money (or a product or to provide a service). It’s not enough to cover your costs; in order to survive and grow as a business, you need to factor in profit, too, after costs. Costs go deeper than producing the product itself. You probably have to pay rent, pay employees, and pay suppliers, among others. All of these will affect the price you charge for your product or service.
  • Look at your Competition – Chances are your customers are too. If the products your competitors offer are similar enough to yours, you can probably base your prices off what they charge. If you offer the same product and then some, that is an additional service or a higher quality product, then you can bump up your price a little. It is good practice to compare the net prices as opposed to the listed price.
  • Know the Market – Research and study outside factors that influence the demand for your product. These factors are fairly flexible and can range from the price of the materials you use to produce your product, to a change in the taxes or income levels your customer base can expect in the near future, either lower or higher. Again, you should research your competitors’ trends as well.

 

 

Choosing the right price for your products and services can mean the difference between making a reasonable profit and robbing people blind / being robbed yourself. Know the products or services you offer, or rather what your competition is charging, and see if you can match or beat those prices while still making a profit.

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(Initial or Renewal Course based on the 2015 AHA Guidelines)
Basic Life Support (BLS) is the foundation for saving lives after cardiac arrest. This course teaches both single-rescuer and team basic life support skills for application in both in-facility and prehospital settings. This course is designed for healthcare professionals and other personnel who need to know how to perform CPR and other basic cardiovascular life support skills.

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Pricing Tips and Warnings

One of the major goals for small businesses just getting started or those revisiting a pricing strategy is to successfully make a profit.  Pricing refers to the process of setting a price for a product or service.  This strategy,  more than any other element of your marketing plan, will have the biggest impact on the amount of profit you make. Industry experts from the United States Small Business Administration and American Express Open Forum have several suggestions to consider when setting (or revisiting) your pricing strategy.

  1. Understand Costs – Small businesses should take the time to analyze their services/products total cost.  Many companies fail to evaluate all the components that need to go in to setting a price for profitability.  Here are some areas to consider when establishing a price range: cost of materials, cost of labor, salaries and benefits, overhead (taxes, rent, insurance, marketing and transportation), showroom or storage costs and credit card fees.
  2. Do a Competitive Analysis – Before setting a price for your products or services do an analysis of your closest competitors  including a list of their strengths and weaknesses both tangible and intangible.  Look at comparable pricing and the package that is involved.  If at all possible try to understand the reasoning behind the pricing.  How did they come to that number? Never assume that your competitor has the pricing right.  Be ready to explain the difference in pricing.  For example does your business offer better quality, customer service, value, experience or cost savings?  Don’t make the mistake of thinking that your competition has done their homework and base your numbers off their research.
  3. Understand the Customer’s Needs – Not only should businesses evaluate their competitors but also the targeted consumer.  What are their needs?  For example analyze the customer that you have.  Do you offer intangible things like stability, reliability and experience?  Does your customer need something specific from you?  Tailoring yourself to those customers can add features that meet their needs and thus can be priced higher.
  4. Take Advantage of Tiered Pricing and Flexible Pricing – There are a multitude of options when it comes to structuring your pricing models.  Understand what the customer is willing to pay for the base product and then include add-ons and high value features.  Don’t get stuck in a pricing war as well.  If your consumer is willing to throw extra business your way in the form of referrals or partnerships then by all means use flexible pricing that will keep them loyal to your brand.

(Sources: U.S. Small Business Administration, Business Online, American Express Open Forum)