Setting the right prices for your services or products is a critical step for any business owner. Set your prices too low, and you’ll struggle to stay afloat. Set your prices too high, and you may struggle to find people who will pay for it.
Doing market research on pricing for your market is a great idea. Don’t let this article title mislead you- you should know what the market says your work is worth. You just shouldn’t let it be the only thing that determines how you set your own prices.
Your Price Points Are Yours
You have crafted your business. You know the value you bring to the table. So when it comes to setting price points, why should you let someone else dictate yours?
If you base your prices off of someone else’s business model and someone else’s work, you can be doing yourself a huge disservice.
Of course, it’s also not just about how much you think your services or products are worth. You also need to do the cold, hard math on your work. How much does it cost you (in time and money) to create your products? How much do your services cost you? What return do you need to see to be able to keep producing? Who are the clients you’re trying to reach, and what price points will they pay?
These are all questions specific to how you run your business. It’s important that you take the time to answer them and to know your business finances through and through. Use all this information to make your price points, instead of blindly going off what the competition is doing.
Knowledge is Power- To a Point
Knowing what your market rate is is powerful knowledge, but only to a point. All business owners need to understand the market they’re walking into. You can’t enter a market and have prices that are totally off base; your business won’t survive. But ultimately, the work and value you’re delivering should determine the price you set. You are the boss after all- you get to make this decision.
Focusing too much on the competition can prove to be a distraction. What you need, especially if you’re just beginning, is to cut out the noise and focus on the work that you’re doing. You can enter a market and change the whole price point if your products stand up to the promises you make a customer.