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Casual Articles - Tips on Pricing Your Product or Service
Promoting offline is a method that many overlook or completely forget about when it comes to advertising their online business. For many people, reading an advertisement in the newspaper, magazine, on a billboard or even in the mail is still a more trusted and safer way to respond to an advert. So this article is going to cover a few of the many ways that you can promote your online business using offline tactics. Some are free, some may require a little money and some thought and cunning.So, lets get into it. Newspaper advertising is still a very beneficial way to go about advertising, and can be extremely profitable.
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categories.
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group consists of the A- to B+ companies. Their pricing is competitive with others in their industry… whether that’s ‘steep or cheap’. Most small businesses fit into this category.
The third-class of companies fit into the “plain-folk-down-home-workingman” pricing strategies group. They are symbolic of the outlet mind-set b
What is the most valuable asset that your firm possesses? Is it your technology, trade secrets, credit line, or customer base? Although we realize the importance of these, most of us believe that our people or our leadership teams are most valuable to us. However, there is another asset that may be even more important as your business matures. A good name or reputation allows your firm to attract quality leaders, excellent employees, key customers, and financing.Proverbs 3:4 tells us that we should desire the favor of both God and Man. We are reminded that a good name is more valuable than great riches (Proverbs 22:1).
While pricing your product or service is an important consideration, I think it receives way too much emphasis and attention. Yes, you need to price your product/services wisely… after all, you’re in business to earn profits. The problem arises when business owners hyper focus on pricing, instead of value.
Below are some general tips on pricing… However, it’s important that you note the following:
1. I am hesitant to recommend universal pricing strategies for all products and services because critical variables differ significantly by industry, geography, personal goals, size, location, and many other reasons. But since you understand your resources, costs, forecasts, and goals better than anyone, you’ll have to fill in the blanks.
2. I am not an expert in business (or personal) finance. This website is devoted to helping you become an excellent marketer. So, while it’s appropriate that I cover pricing and financial planning as part of the marketing process it would be irresponsible to delve much further.
Tips:
√ Make sure you consult with an objective financial advisor… one that specializes in small business investment capital, cash flow management, and the like. Many, many small businesses go under due to lack of proper funding. Make sure you have enough money, particularly in the first couple of years, to weather unexpected storms.
√ Arrive at ballpark pricing by assigning costs by product. You can start with your costs and work up or begin with a proposed price and work back. Here’s an illustration how of this works:
Let’s assume I am (once again) a widget retailer and the following is true…
Money I receive when I sell one widget $10.00
* Less labor and materials (costs to produce one widget)
or my cost of goods sold (COGS)
* Labor (yours or anyone else’s) - 2.00
* Materials - 1.00
Gross Profit (amount of money I’m left) $7.00
This means my gross profit margin is 70%
* Less Administrative Costs (rent, utilities, office supplies,
furniture, mgmt. salaries, etc.) - .80
* Less Marketing (signage, advertising, on-hold music,
business cards, specialty ad items, etc.) - 1.20
Net Margin (before taxes) $5.00 50%
How do you assign administrative and marketing costs by product? Simply divide the total amount you’ve spent in each category over a specific period of time. Then figure out what percentage of your total budget (for the same period of time) they represent. Deduct that percentage amount off your sales price.
For example, let’s say I sold $500,000 worth of products last year. Of that, my $10-widget accounted for 50% of the sales, or $250,000. My total administrative and marketing outlays only were $100,000.
Since my $10-widget was 50% of my business I’ll assign that product the same percentage of costs, or $50,000… $20,000 for administrative expenses and $30,000 on marketing. Based on earning of $250,000 I should deduct $20,000 or 8% for administrative costs, and $30,000 or 12% for marketing expenses - $.80 and $1.20 respectively.
Please do not assume that any of these are standard percentages… they vary widely. If your company is new you’ll obviously have to use your forecast financials.
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categories.
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group consists of the A- to B+ companies. Their pricing is competitive with others in their industry… whether that’s ‘steep or cheap’. Most small businesses fit into this category.
The third-class of companies fit into the “plain-folk-down-home-workingman” pricing strategies group. They are symbolic of the outlet mind-set bu
In the business world sometimes you would need to provide negative feedback. It is not very pleasant. In this article I will discuss negative feedbacks in more details.Communication skillsMr. To demonstrated good communication skills while performing his duties within the marketing division. His ability to listen to the bank’s new clients (small and medium enterprises- SMEs) and convey to his colleagues clients’ needs for financial funding was demonstrated in the successful implementation of Vietcombank’s micro-credit program supporting SMEs, particularly in private sector.Mr. To effectively interacte
2. I am not an expert in business (or personal) finance. This website is devoted to helping you become an excellent marketer. So, while it’s appropriate that I cover pricing and financial planning as part of the marketing process it would be irresponsible to delve much further.
Tips:
√ Make sure you consult with an objective financial advisor… one that specializes in small business investment capital, cash flow management, and the like. Many, many small businesses go under due to lack of proper funding. Make sure you have enough money, particularly in the first couple of years, to weather unexpected storms.
√ Arrive at ballpark pricing by assigning costs by product. You can start with your costs and work up or begin with a proposed price and work back. Here’s an illustration how of this works:
Let’s assume I am (once again) a widget retailer and the following is true…
Money I receive when I sell one widget $10.00
* Less labor and materials (costs to produce one widget)
or my cost of goods sold (COGS)
* Labor (yours or anyone else’s) - 2.00
* Materials - 1.00
Gross Profit (amount of money I’m left) $7.00
This means my gross profit margin is 70%
* Less Administrative Costs (rent, utilities, office supplies,
furniture, mgmt. salaries, etc.) - .80
* Less Marketing (signage, advertising, on-hold music,
business cards, specialty ad items, etc.) - 1.20
Net Margin (before taxes) $5.00 50%
How do you assign administrative and marketing costs by product? Simply divide the total amount you’ve spent in each category over a specific period of time. Then figure out what percentage of your total budget (for the same period of time) they represent. Deduct that percentage amount off your sales price.
For example, let’s say I sold $500,000 worth of products last year. Of that, my $10-widget accounted for 50% of the sales, or $250,000. My total administrative and marketing outlays only were $100,000.
Since my $10-widget was 50% of my business I’ll assign that product the same percentage of costs, or $50,000… $20,000 for administrative expenses and $30,000 on marketing. Based on earning of $250,000 I should deduct $20,000 or 8% for administrative costs, and $30,000 or 12% for marketing expenses - $.80 and $1.20 respectively.
Please do not assume that any of these are standard percentages… they vary widely. If your company is new you’ll obviously have to use your forecast financials.
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categories.
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group consists of the A- to B+ companies. Their pricing is competitive with others in their industry… whether that’s ‘steep or cheap’. Most small businesses fit into this category.
The third-class of companies fit into the “plain-folk-down-home-workingman” pricing strategies group. They are symbolic of the outlet mind-set b
How many times do you have to fail at something in order to succeed? Did you know that Thomas Edison failed 10,000 times while trying to invent the light bulb? He certainly had a learn and do attitude! He was able to turn each failed experiment into a successful way not to invent the light bulb. Therefore, what can we learn from this? You can adopt the fail forward strategy too.In reality, none of us are failures. It's true, we will experience times of defeat, setbacks, problems, and adversity, but remember, each one of us is meant to succeed in life, it is our destiny. However, we much choose our destiny. Henry
Money I receive when I sell one widget $10.00
* Less labor and materials (costs to produce one widget)
or my cost of goods sold (COGS)
* Labor (yours or anyone else’s) - 2.00
* Materials - 1.00
Gross Profit (amount of money I’m left) $7.00
This means my gross profit margin is 70%
* Less Administrative Costs (rent, utilities, office supplies,
furniture, mgmt. salaries, etc.) - .80
* Less Marketing (signage, advertising, on-hold music,
business cards, specialty ad items, etc.) - 1.20
Net Margin (before taxes) $5.00 50%
How do you assign administrative and marketing costs by product? Simply divide the total amount you’ve spent in each category over a specific period of time. Then figure out what percentage of your total budget (for the same period of time) they represent. Deduct that percentage amount off your sales price.
For example, let’s say I sold $500,000 worth of products last year. Of that, my $10-widget accounted for 50% of the sales, or $250,000. My total administrative and marketing outlays only were $100,000.
Since my $10-widget was 50% of my business I’ll assign that product the same percentage of costs, or $50,000… $20,000 for administrative expenses and $30,000 on marketing. Based on earning of $250,000 I should deduct $20,000 or 8% for administrative costs, and $30,000 or 12% for marketing expenses - $.80 and $1.20 respectively.
Please do not assume that any of these are standard percentages… they vary widely. If your company is new you’ll obviously have to use your forecast financials.
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categories.
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group consists of the A- to B+ companies. Their pricing is competitive with others in their industry… whether that’s ‘steep or cheap’. Most small businesses fit into this category.
The third-class of companies fit into the “plain-folk-down-home-workingman” pricing strategies group. They are symbolic of the outlet mind-set b
As you enter the job market, (for the first time or after a while) you might find that there are a lot of buzzwords thrown around, including the terms career and job. You might be looking for a career, but you aren’t going to enter the career market! Decide if you are looking for a job or a career today, and how to get the position you want.According to the Oxford English Dictionary, a job is a piece of work that you do because of your occupation. A job also describes paid employment. A career, according to the OED, is a “person’s course or progress through life.” This article defines j
For example, let’s say I sold $500,000 worth of products last year. Of that, my $10-widget accounted for 50% of the sales, or $250,000. My total administrative and marketing outlays only were $100,000.
Since my $10-widget was 50% of my business I’ll assign that product the same percentage of costs, or $50,000… $20,000 for administrative expenses and $30,000 on marketing. Based on earning of $250,000 I should deduct $20,000 or 8% for administrative costs, and $30,000 or 12% for marketing expenses - $.80 and $1.20 respectively.
Please do not assume that any of these are standard percentages… they vary widely. If your company is new you’ll obviously have to use your forecast financials.
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categories.
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group consists of the A- to B+ companies. Their pricing is competitive with others in their industry… whether that’s ‘steep or cheap’. Most small businesses fit into this category.
The third-class of companies fit into the “plain-folk-down-home-workingman” pricing strategies group. They are symbolic of the outlet mind-set b
To attract clients who pay in full and out of pocket for your services, it's imperative to position yourself as a helpful expert. This is true whether you are a business consultant, a beautician, a psychotherapist, a gardener, a car mechanic, a coach or a massage therapist.It's a simple fact of human behavior: People are more likely to believe that you can help them if they perceive you as an expert, which, in turn, increases the likelihood that they will hire you. For example, you wouldn't choose a car enthusiast to overhaul your engine; you'd choose an experienced mechanic.Newsletters are one of the simplest an
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categories.
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group consists of the A- to B+ companies. Their pricing is competitive with others in their industry… whether that’s ‘steep or cheap’. Most small businesses fit into this category.
The third-class of companies fit into the “plain-folk-down-home-workingman” pricing strategies group. They are symbolic of the outlet mind-set but once again, this is no reflection on their products’ value or quality.
At first glance these might appear arbitrary and silly, but place your company into one of the three categories. (Remember, while each appeal to different audiences they are equally valid and offer comparable value in the marketplace.)
Next, use the objective product pricing you’ve already established and check to make sure it’s in line with other companies in your group. If so, reduce the selected price by a small amount… $1.00 to $5.00 is usually enough.
This is a simple and brilliant way to ensure that you, your customers and your wallet are thrilled … and you’re not competing on price!
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