What should you charge?
Among the tough decisions a new business owner faces is how much to charge for products or services. A number of considerations go into pricing, including the costs of producing or creating what a company sells, its other expenses and the profit an owner hopes to make.
There’s more: Will lower prices help bring in more business, something that’s critical to a startup? And what does the competition charge? It can be quite a balancing act.
Small business experts warn against selling a product or service too cheaply. A price or rate can be a statement of how much owners value what they sell — too low a price might make a potential customer wonder about quality.
Doing some research can help determine a price range; search online to see what competitors charge for similar products. Trade organizations can be good resources. And see if business owners you know are willing to discuss their pricing process, even if they’re in a different industry.
Owners can also get some help from mentors at SCORE, the organization that gives free advice to small businesses. Find a mentor at www.score.org.
Business owners may decide on a price above the industry trends — that’s OK, but be prepared to explain to potential customers why it will be worth it to them to pay the premium.