affix the proper price to a service or product we provide because we don’t want to be ostracised. We don’t want our new business to be alienated as the one that is the ‘most expensive’.
This happens for many reasons – sometimes new or startup businesses feel since the public is hearing about them for the first time, they wouldn’t want to ‘scare’ away potential customers by affixing the proper price(s) for their products. We are all guilty of the constant tossing and turning that comes with setting a price when we decide to start a business.
This particular aspect of business is of utmost importance because this is the part we must all get absolutely spot on…. 100% of the time.
Buyers tend to go with the cheapest price(s) Fact! But not all of them. Some buyers are just interested in buying the ‘right stuff’ and by that I mean QUALITY. So what could possibly stop you from providing the right price for a quality product? Fear? Timidity? There is a theory I have been working on recently which shed a bit of light on this issue. After speaking to over 20 startup businesses and over 20 random buyers, it became clear very quickly that start-up businesses try their hardest to enter the market with a perceived ‘competitive price’ (which in other words mean lowest price) simply because they are afraid of scaring potential customers away. The argument is that these customers are beneficial to their initial survival, so why chase them away with outrageous prices?.
However, on the other hand, the buyers I sampled are clear about the fact that they can pay over-the-top prices for a ‘good’ product regardless of status levels of the company i.e startup or established. Buyer psychology is such that they are willing to buy a product of quality initially without much consideration for whether the company has been trading for 10 years or 10 days.
Setting a low price on a service or product simply because it is new is a mistake and should be avoided. The thought, sleepless nights and efforts that goes into setting the ‘right price’ should be concentrated on developing your product and making it that much more perfect than your competition. If that is done, you can stick a ‘reasonable’ market price and buyers will buy.
Setting the right price on a new product or service has always (and will always) be a sticky issue for entrepreneurs and new startups. It’s best to look around, compare the going price and set a price befitting your product safe in the knowledge that buyers will buy because your product is good.
Depending on the type of business you have or about starting, the price you set can also be a tool to forge a lasting relationship with your customers (more on this in the coming weeks).
Work towards your price, don’t short change your yourself and don’t be shy to give your customers the right price.