Traverse City Record-Eagle


October 27, 2013

Pricing strategies for small business

One of the keys to success in small business is giving customers what they want. Steven Strauss, author of the book The Small Business Bible, said today’s customers want bargains.

Pricing products and services has always been a challenge for small business owners. Low prices may attract customers initially, but they will often go elsewhere as soon as they find an even better deal. Retailers may be able to offset low margins on some products through volume or the sales of other higher-priced goods. However, service businesses typically don’t have that flexibility and may need to stick with a fixed fee schedule to be competitive.

So how can a small business owner strike a balance between pricing and profit, yet still attract customers in these cost-conscious times?

First it’s important to understand what competitors are charging in your market area. You can charge more only if your product or service is unique or somehow better than your competitors ... or your brand is better known. To the extent you can, building added value into your products or services will allow you to command a higher price.

Learn more about competitor pricing through online research, such as a Google search, and reviewing local publications or other trade journals. Whenever possible, visit your key competitors’ places of business to see first-hand what products and services are offered and at what prices.

Once you have a better sense for competitive pricing, the next step is to compare those prices to your actual cost of doing business. It’s important to gather data on all of your costs including retail or office space, salaries, utilities, inventory, insurance, supplies, etc. Make sure these costs are accurate and account for seasonal or other fluctuations. And, of course, don’t forget to include a reasonable profit margin per item or hour. Blindly charging the same as your competitors may be inappropriate and you won’t remain in business very long if your prices only allow you to break even.

Text Only

the BIZ

AP Video
Raw: More Than 100,000 Gather for Easter Sunday Raw: Greeks Celebrate Easter With "Rocket War" Police Question Captain, Crew on Ferry Disaster Raw: Orthodox Christians Observe Easter Rite Ceremony Marks 19th Anniversary of OKC Bombing Raw: Four French Journalists Freed From Syria Raw: Massive 7.2 Earthquake Rocks Mexico Captain of Sunken SKorean Ferry Arrested Raw: Fire Destroys 3 N.J. Beachfront Homes Raw: Pope Presides Over Good Friday Mass Raw: Space X Launches to Space Station Superheroes Descend on Capitol Mall Man Charged in Kansas City Highway Shootings Obama Awards Navy Football Trophy Anti-semitic Leaflets Posted in Eastern Ukraine Raw: Magnitude-7.2 Earthquake Shakes Mexico City Ceremony at MIT Remembers One of Boston's Finest Raw: Students Hurt in Colo. School Bus Crash Deadly Avalanche Sweeps Slopes of Mount Everest
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide