A competitive pricing strategy can do wonders for your business, in terms of attracting customer attention, boosting your market share, and improving your company’s profitability. It’s easy to undersell yourself, which is why it’s important to price your products and services based on the value you create.
Creating a value based pricing strategy: 7 steps to ensure you don’t undersell yourself
It is critical that you are confident in your abilities, willing to negotiate with your clients, and able to communicate your accomplishments and value to the table. A lack of self-awareness might be why you undersell yourself or price your product wrong.
Here are seven tips to help you come up with a competitive pricing strategy for your business if you are having trouble making it work.
1. Understand your cost.
This boils down to understanding price vs value—not only the cost of producing your product and services but also the value you add, including your personality, which is branding.
2. Research your competitors and offer a competitive pricing strategy.
Do your competitors adhere to a value based pricing strategy? Do they undersell themselves? Study your competition and determine a starting point for pricing: you don’t need to charge too high or too low; instead, you’ll base your pricing on the value you create. It can also help you identify a gap you can fill with your products and services. Start somewhere in the middle, so you can always adjust.
3. Understand your target market
Who are the people that are going to pay for your services, and what are their needs? Also, consider their preferences to determine the right value based pricing strategy.
4. Consider your brand’s worth.
Brand value comes with credibility and trust, and a new business might not have that yet. Still, try to come up with ways to establish your credibility among your audience.
5. Don’t be afraid to adjust your pricing.
Be humble enough to pay attention to the price vs value equation and know if you are really worth the prices you’re charging for your products and services. Your prices don’t need to be set in stone; what matters is that you have a competitive pricing strategy.
Never allow your ego to interfere with your perception; be willing to make necessary adjustments. Your prices should be flexible and change as your business evolves.
6. Communicate your value
When determining your pricing, be willing to communicate the value that comes with it. People will be ready to pay a premium if they derive the value they desire from your product. Your value proposition should be reflected in your pricing.
Give people a reason to pay more; resist the temptation to undersell yourself. Tell them who you are and what problem you will be solving.
7. Be prepared to bargain.
Most people will not agree with your initial price despite the value proposed. It would be best if you were willing to convince them through proper negotiation.
Takeaway: Devising a competitive pricing strategy
It’s important to note that a competitive pricing strategy should be part of an overall business strategy and should be consistently monitored and adjusted as needed. Knowing your worth and setting the right price based on a competitive pricing strategy can be instrumental in running a successful business.
