What Should Your Starting Price Be
Think about a skill or service you would like to offer and what you feel is the fair price for it.
Suppose you want to sell your services of selling vintage clothes on consignment. What are the fair prices for something?
For much less than retail, determine the cost of doing business, including marketing and advertising costs, as well as other expenses such as employee salaries. You can find this information by performing market research on how much similar businesses charge in your area.
For much more than retail value, add on a healthy margin to remain profitable. After you determine the fair price of your product or service, put your price at least 50 percent higher, but perhaps as much as 200 percent higher. Then add and subtract up to 10% from that number until you find the number where it is most comfortable for both you and clients. In other words, find a price that feels fair for both parties.
In other situations, an experienced business owner will know what types of products are selling well in the area by knowing their target market and customer's needs, wants and desires (especially if it's something she's being recommended for).
Consideration for your staff needs, and what you want to gain out of them motivated him to create a low starting price, yet as usual, there's no way to set the perfect amount of income you want for your business. For example, if you are a natural foods bakery, offering organic breads and pastries in the area can charge higher than local competitors who sell non-organic items.
And as for the same restaurant, with a quality product at lower prices or quality food at higher prices will make your business stand out from the crowd in a positive way. You can also set a high price to base it on the quality of the service. You can consider these factors to find out the starting price for your business.
Above and beyond your initial profit, you'll need to consider taxes, as well as costs of doing business (notably, staff salaries).
Don't set a price that's too low though, because you don't make money if you're not making sales; and in fact if you set lower prices for your goods or services than another business does in that same market location or industry, there is a high risk that you will lose sales. This is especially true if others sell their products much cheaper than you are charging or at higher quality. If you're not making sales and don't make a profit, you won't be in business very long.
Raise your prices gradually as your sales increase. You can also lower them temporarily if there are unforeseen circumstances that lead to a lowering of demand for your product or services, such as the loss of a customer or business owner.
In addition to raising and lowering the price of your goods or services based on increased revenue, you can put in place other strategies such as:
Collecting commissions from subcontractors and hiring employees who've already had relevant experience in helping them start their own businesses, which helps you to establish credibility with them both personally and professionally.
Offering services in a special way, such as a one-time special for a limited time.
Under some circumstances, you can also establish an instant gratification policy that states that if a customer makes a purchase worth more than $100 within 30 days, he or she will receive the product without having to pay the full price of it. This is especially useful if your product or service isn't fully built out and ready for sale.
Recommended Reading: How Much Should I Charge For My Services [ARTICLE]
So what should your starting price be? Start by thinking about how much you're willing to work for when you start out and then determine what kind of income your services will generate. Don't be afraid to ask for a higher price than you think is fair. The important thing is to obtain permission from your customers before changing the price. As long as you don't lose business, it's okay to raise your prices. [ARTICLE]
What Should Your Starting Price Be?
Think about a skill or service you would like to offer and what you feel is the fair price for it.
Suppose you want to sell your services of selling vintage clothes on consignment. What are the fair prices for something?
For much less than retail, determine the cost of doing business, including marketing and advertising costs, as well as other expenses such as employee salaries. You can find this information by performing market research on how much similar businesses charge in your area.
For much more than retail value, add on a healthy margin to remain profitable. After you determine the fair price of your product or service, put your price at least 50 percent higher, but perhaps as much as 200 percent higher. Then add and subtract up to 10% from that number until you find the number where it is most comfortable for both you and clients. In other words, find a price that feels fair for both parties.
For example, if you are a natural foods bakery, offering organic breads and pastries in the area can charge higher than local competitors who sell non-organic items.
You can also set a high price to base it on the quality of the service. You can consider these factors to find out the starting price for your business.
In addition to raising and lowering the price of your goods or services based on increased revenue, you can put in place other strategies such as:
Under some circumstances, you can also establish an instant gratification policy that states that if a customer makes a purchase worth more than $100 within 30 days, he or she will receive the product without having to pay the full price of it. This is especially useful if your product or service isn't fully built out and ready for sale.
Raise your prices gradually as your sales increase. You can also lower them temporarily if there are unforeseen circumstances that lead to a lowering of demand for your product or services, such as the loss of a customer or business owner.
Recommended Reading: What Should My Starting Price Be? So what should your starting price be? Start by thinking about how much you're willing to work for when you start out and then determine what kind of income your services will generate. Don't be afraid to ask for a higher price than you think is fair. The important thing is to obtain permission from your customers before changing the price.
Conclusion
Pricing is a vital part of your business. Not only does it need to cover the costs of doing business, but it also needs to generate profits for you, and it needs to represent the value that your customer sees in his or her purchase.
To get started with pricing your products or services consider using a pricing strategy based on how much you're willing to work for when you start out, what kind of income your services will generate and other factors such as the quality of service you offer.
Don't be afraid to charge more than you think is fair and raise prices gradually as your business grows. Also be aware of all circumstances that may change the price in which case, adjust accordingly.