By: Emily Klaus | Marketing Associate
The point of every business, big or small, is to make profit. That might seem pretty simple: have a product or service, sell it and reap the reward of sweet, sweet money. However, a huge part of owning a small business is being savvy about knowing how exactly to price your products and services. If you underprice, you risk not being able to cover your expenses on the back end. If you overprice, you risk turning off many of your customers by your markup. Essentially, pricing is a very delicate balance. Thankfully, following these tips for pricing your products and services should help keep your customers happy and your business banking wallet satisfied.
Understand what goes into pricing
Before you begin trying to figure out just how much you will sell your products and services for, you need to have a clear understanding of what can factor into the number on the sticker or tag. Material costs are the cost to you of your product, i.e. if the dresses you bought for your boutique were $30 apiece, then $30 is your material cost for that product. Labor costs are the costs of paying the sales associates and cashiers to sell those dresses. Overhead costs are costs that aren’t immediately identifiable. These can include what you spent on marketing to advertise the dress, and the rent, insurance and utilities you pay to house the dress. These costs aren’t directly related to the actual dress, but they are all factors you must consider when pricing your product.
Check your competitors!
Still not sure how exactly to price the products and services for your small business? Snoop around and see what your competitors are charging their customers! Doing this not only helps to give you a ballpark idea of where to price, but it can also help solidify your position in the local marketplace as the “discount den” or “high-priced heaven”.
However, be sure not to base your prices off what larger retailers are charging. Chains and large corporations buy their products in large volumes and usually get a decent discount because of that, so their material cost per unit will be much lower than yours.
Discounts, specials and “likes” for % off!
It’s no secret that everyone loves a good deal, so offer some once in awhile! Add window signage that details a special sale or put a coupon insert in your local newspaper or neighborhood magazine. This will not only help spread the word about your business, but coupons will also help to encourage new customers to come in and visit, if only to use the coupon.
Offering discounts for “likes” and “follows” on social media generally garners good response, as well. Dentists can offer $10 off your next whitening if you like their page on Facebook or a coffee shop may offer a free small coffee if you follow them on Twitter or use their hashtag on Instagram!
No matter how you price your products, if your small business is in need of working capital to purchase more inventory, develop a marketing campaign or repair your equipment, contact Jet Capital today at 866-845-9674 to get fast working capital to grow your business!
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