Are You Charging Enough?
January 20, 2009 by admin
Filed under Business Management Tips
by Carrie Wilkerson
Women are often hesitant to assign a fair value to what they sell or do. Pricing is a very important part of a business, especially when you are dealing with goods and services.
Running an at-home business requires prudence with pricing for the simple fact you probably do most of your sales online or through mailings. Retaining customers is imperative, but when it comes to pricing, you first need to know the type of customer you are attracting.
About.com categorizes customers into a few basic sub-groups:
-Economical Shoppers. These are the women who dig through piles of clothes and discount items in order to find the perfect sale. Or they get to the store at 5 a.m. for the “early bird specials” during the holidays.
-Status-oriented Shoppers. This type of shopper could care less if she pays one dollar or a thousand dollars for a pair of pajamas, just as long as they are a particular brand or from a particular store.
-Convenience-oriented Shoppers. This woman is on a schedule, and she is willing to pay extra for convenience.
-Assortment-oriented Shoppers. This could classify a majority of women, especially with the rise of major department stores and shopping centers. These shoppers are the one-stop-shop kind of ladies.
-Personalizing Shoppers. At-home businesses and boutiques focus on these shoppers because the women like to spend money at places where they know the person or feel as if they know the owner.
Once you know the kind of customer your at-home business attracts, setting a price for your product or service can be a little easier. There are some essential steps to follow when setting prices for your business, and powerhomebiz.com sums them up nicely in seven easy steps.
Step One: Keep your prices realistic. One of the biggest mistakes you can make is to follow the crowd when setting your prices. Your business has certain cost structures and expenses to meet, and your pricing should reflect this.
Step Two: Cover all your costs. Make sure when you set prices that you are meeting overhead. Your pricing should also reflect what you paid to get the merchandise in the first place. Your goal is to hit the middle line and not set your prices so high that you can’t meet your expenses, or too low and you can’t cover the initial cost of the product.
Step Three: Keep in line with inflation. Inflation doesn’t just affect the housing market. It plays a role in your business too. Keep your prices in check with inflation because as it rises, what you pay to make or sell a product will also rise. This may require you to raise the cost of your product once a year, but explain the rise in pricing to customers.
Step Four: Don’t forget to factor in salary. This is critical, so pay close attention! Your efforts with an at-home business need to be recognized in your salary. So price your items with this in mind. You are the one keeping the business going, right? Well, don’t forget to pay the hand that rocks the cradle.
Step Five: Low pricing won’t always bring in sales. Having your prices set too low doesn’t always mean you will attract more customers. This goes back to knowing your clientele. There are shoppers out there who pay extra money when they know they are getting an exclusive or high-quality product.
Step Six: Price low, but keep it smart. If you’re just starting out with your at-home business, having a solid, but low price can be a prudent way to get customers knocking down the door. Just bare in mind you are shooting for repeat customers and if you need to raise prices later on, you might loose clientele. So be smart if you feel you must start low and make sure you customers know the product is quality.
Step Seven: Use Discounts Cautiously. This last step is important to follow because at some point in your business you will need to hold a sale or special discount. Discounts are great to use when you’re trying to get rid of bulk items or out-dated merchandise. It is also nice to offer discounts for bulk purchases or large orders by your customers. And when sales are down, using the discount can help pick things up a bit.
Pricing might seem as intimidating as purchasing a three-thousand dollar Waterford vase, but it’s really a sheep in wolf’s clothing. You just have to know your financial status and where you want the business to go before setting a price for your goods and services. As your business grows and prospers, your pricing will move right along too.
Carrie Wilkerson is the voice of experience. From corporate life to teaching high school to direct sales, she has ‘been there and done that’ professionally and personally. An ‘overnight mom’ to 2 toddlers through adoption, her priorities instantly changed and so did her workplace. She’s now built several businesses and coached others to do the same while overcoming extreme debt, losing 110lbs and having 2 more children, for a total of 4 children, ages infant through 12! As ‘The Barefoot Executive’, Carrie and her network of experts have quickly become the definite resource for helping women achieve extra income and career goals while working from home. the-barefoot-executive.com
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