Pricing is one of the marketing 4 Ps which we have covered before. If you can find a way to deliver your service or products cheaper than everyone else and not compromise on quality, you are on to a winner. Providing, of course, you can market this properly. This is the age-old conundrum of business and it is so competitive in every walk of life.
The problem lies in the initial enthusiasm of a product idea or the start of a new business concept. When passion overrides the practicality of delivering what you say you can deliver. ‘Oh we’ll find a way around that cost’ or ‘we can make it up in another part of the business’ is super dangerous. The actual cost gets waylaid amongst the desire to deliver and achieve something.
It is absolutely key to get your costings spot on at the beginning.
It is absolutely key to get your costings spot on at the beginning. You don’t want your business harmed in the medium or long term by undervalued products and services that you are inherently committed to.
- Cost pricing. When you are scoping out the feasibility of a new canvas product or portrait series, think about the end product and work backwards. Detailing the whole journey from finish to start leaves no stone unturned. Examine and detail all your cost points. Once you have outlined all your costs, add in a contingency and then your margin on top.
- Be realistic. Passion will take you only so far. It is a crucial element to both starting your business and carrying you through the parts that are not quite as exciting as taking shots. A healthy dose of realism when you look at the finer detail, such as suppliers or materials, goes a long way to keeping your finances in check.
- Local competition. This is your immediate focus in terms of how much you can realistically expect to charge within your catchment area. If you are massively undercutting their prices, you will meet with scepticism and start from a place of no trust. This is why you need to triple-sure of your costs, margins and pricing. Trust is easy to lose and hard to gain, and the local glare is unforgiving.
- Back yourself and your service. If you are a premium service or you really have found a way to significantly undercut the competition, then be confident about your pricing. Trust is gained from being transparent and honest. If customers examine your process and find no holes, then you are in a great position.
Digital commerce has disrupted all ends of the process. If people want to find something at a cost that is suitable for their budget, in general, they will find it. Your business will inevitably have some mediocre value in some of the products and that is OK.
Being a destination for essential items that are not particularly valuable from a margin point of view is a good thing because it allows you to capture people’s attention. Amazon is extremely good at that. Use your mediocre range to tell me more people about your other goods and services. Having people on your site or in your shop is half the battle.