The Complete Guide to Small Business Pricing 

Jan 3, 2020

The Complete Guide to Small Business Pricing 

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Small business pricing can sound deceptively simple, as though it’s one final item on your checklist before your product or service hits the market. Don’t fall into this trap. Pricing strategy is intrinsically tied to the lifeblood of your business. Price products and services wisely, and you’ll set yourself up for sustained success. Miss the mark, and every aspect of your business could suffer. 

As with most things in life, good pricing requires balance, which means you should eschew the worn-out mantra that you should always have the lowest price in the market. This one-size-beats-all approach has its place but will severely undercut your success in many situations.

Again, good pricing requires balance. Your competitors’ pricing is relevant to the equation, but so are all the factors occurring within your own walls.

“Whether you’re launching a new product line or a new business, developing a pricing strategy is an essential first step,” explains a Forbes analysis of pricing strategy. “To do this, you’ll need to consider many factors, from the time and energy it takes to develop your product or perform your service, to your local market’s price points. You don’t want to underprice your offerings, but you also don’t want to price yourself too high and lose out to your more affordable competitors.”

It’s been proven again and again that the lowest price is rarely the best price. Sure, it will catch the eye of budget shoppers. But a bargain barrel price also conveys the feeling that the product or service comes from a barrel. It makes the value solely about price, rather than focusing on the unique benefits you provide. 

When you race to the bottom of the pricing scale, you do more than commoditize your product or service. You also make yourself susceptible to a pricing war. These battles don’t end well for most small businesses, as larger competitors with lower operating costs can beat you almost every time. 

“Avoid getting caught in the trap of comparing yourself to others with similar services,” says Forbes. “Forget them. Really analyze what you do best and ask a generous price for it. It’s OK and actually better if not everyone goes for it. You only need a select few who appreciate what you offer and are happy to pay for it.”

About the Author

Grant Olsen

Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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