How to build the ultimate business dashboard for growth
Without the right pricing strategy, even the best of businesses can fail. Unfortunately, very few small businesses pay attention to it. It tends to be a trial-and-error approach. But frequent changes can adversely impact consumer’s perceptions of the brand. In this article, we share the foundations of a pricing strategy to be competitive. They are:
1. What are your business goals
Not every pricing strategy is designed to maximize profits. Your pricing strategy is a tool to help you achieve the goals of the business. It could be to facilitate market entry, trigger brand switch or reach a new segment. Being clear of your business goals avoids arbitrarily setting a price.
2. Know your numbers
Whether billable man-hours or cost of raw materials, you must know the building blocks of the cost of production. Without these numbers, you will experience the pitfalls of being over or under-priced. Engage the help of your accountant in the process.
3. Understand your target audience
Your pricing strategy indicates the value customers have placed on the solution you provide to resolve a problem they have. Hence, it is important you have a deep appreciation of who they are and the role your product or service plays in their lives. Without this knowledge, your price point may miss the mark. It will lead to your target audience questioning the authenticity of your offer.
To this end, it is also important for the other brand touchpoints to be consistent with your pricing strategy. Be it packaging design or distribution channel, they need to support the latter.
4. Audit your competitive landscape
The intention isn’t to mirror the competitors’ pricing strategy. Having said that, it is important you do not stray too far away.
Of greater importance in the audit is to match competitors’ offering and their respective prices. This indicates how much consumers are willing to pay for the different propositions of competitors. It is a benchmarking exercise. Where does your uniqueness-price point sit on the chart?