Every business owner can benefit from an article on pricing. With everyone buzzing about inline marketing, there is a danger of giving too much away for free. I recently wrote to an old client and friend that selling something for a price places certain conditions on the buyer and on the seller that are not available to the purchaser of free services. Another friend and client and I have spoken at length about under pricing products. The same quality product which sells for sells for $59 is viewed as inferior to something which costs $199. The purchaser will certainly return the higher priced item if it lacks value. The lower priced item may already be marked in the purchaser’s mind as inferior. My client found she sometimes sold more events at a higher price even though the market for the less expensive items seemed larger. I have had a similar experience comparing shoppers in New York (NY) with shoppers in Louisiana (LA). In a previous life I worked at The Home Depot. A big box retail store. In LA, shoppers were bargain hunters and had little respect for the products or the people servicing them. In NY, shoppers tended to be affluent people with money to spend. They had a great deal of respect for the merchandise and for the sales clerks. I noticed this at first from open packages. In LA, customers would open the first unopened box if there was no display. Closing clerks would have to repair several packages each evening. In NY, customers tended to open just one package and return its contents for the next customer to search. I rarley found more than one opened box per product. At first, I thought this was due to the customs of the area, but shopping at other discount stores revealed to me that LA bargain shoppers were in NY as well. It just happened that Home Depot was new to the area at that time and the bargain hunters were not visiting (yet). My point is that people who shop for price are not the best customers to have. My little sister is a price conscious shopper. In conversations (and debates) I have found that on some level she believes the markup on items by stores, like Wal-Mart, are all profits and that she is being gouged for price. It makes her more determined to get a lower price. It also potentially makes her a poor customer for very small businesses. In my travels I have often found many people who undervalue their labor. One of my regular contractors here at the mobile home park realized this a few years ago. So, he avoids giving me a bill like the plague. He knows I will pay him more than he would charge me. He also knows I will never use anyone but him. I value his labor and his advice higher than he does. Life is too short to spend it with penny wise and pound foolish people. Raise your prices enough to get the customers you want, not the number of sales you think you need. You will have less customers and that means working harder to keep them, but if you do what you love, working harder is easier than constantly working your Accounts Receivables.
Digg!