How to Tell if Your Pricing is Right
Excellent post from Small Business Trends. By Andy Birol on February 21, 2010
Pricing has always been one of the greatest games in business. In lean times, this is more true than ever. The price you offer has to reflect value, convey trust and cover costs of sales, delivery, and unfortunately, collections. And you have to be able to get your price.
How do you know when a price is right? Let’s say that you meet a prospect for lunch in an attempt to close a deal. When you finally come to the point of stating your price, one of three things happens:
- Your prospect immediately says no, stands, and walks away.
- Your prospect immediately says yes, shakes your hand, and treats you, the waiter, and everyone at the surrounding tables to champagne.
- Your prospect contemplates the offer. The long silence feels like an ocean in your head until you hear that magical word: Yes!
In two of the three situations you closed the deal, but only in the third have you done it right.
If the prospect rejects the offer out of hand, he believes the price is too high, which means that you have failed to sell the benefits of what your company provides.
If the prospect takes the offer immediately, you have given away too much value for too low a price; your prospect feels like he’s discovered a Van Gogh original at a garage sale!
You know you’ve got it right when your prospect accepts your offer only after some deliberation. In this case, he knows the value he is losing if he says no.
Ultimately, your price is your demonstration of value. If you are getting your price in difficult times, congratulations, for you are truly valued for the value you bring.
About the Author
Andy Birol is the author of “Focus. Accomplish. Grow… the Business Owner’s Guide to Growth.” He is also a noted small business coach, consultant and speaker who has been interviewed on CNN, Wall Street Journal, The New York Times, Entrepreneur, and Fortune Small Business. His blog is Profitable Growth.
Add comment February 26, 2010
7 Tips to Starting Your Online Marketing Strategy
Most business owners have the potential to become excellent online markers, but for many the difficulty is deciding where to start. Here are my tips to get you pointed in the right direction:
1. Invest wisely and carefully – It’s common for small businesses to invest in the development of their website and leave little finance for online marketing. Consider developing a website which has the most basic functionality that meets the needs of your staff and customers. The reason is, that before running your business for a while you’ll find it very hard to know precisely which features you need and which are obsolete.
2. Evaluate short term vs long term channels – Some online marketing channels will take time to generate traffic and some will take just a few minutes to generate traffic. If you’re still fine-tuning your business model, prices and products perhaps start working on a longer term online marketing channel. For example, search engine optimisation is considered a long term traffic channel because it takes time to optimise a website, while pay per click channels such as Googles’ AdWords can start driving traffic in minutes.
3. Price each channel and budget well – There are various traffic channels in online marketing, some free and some paid. Free channels such as social media optimisation, search engine optimisation, free directories, Google product search etc. are free and will require investment but more in terms of your time. On the other hand, paid traffic channels such pay per click, niche directories, affiliate program, Amazon product placement, eBay product placement etc. will cost the business money from the get go and will therefore require close monitoring.
4. Employ a type of multi-channel strategy – Don’t put all your eggs in one basket. The key to small business online marketing is to use all the channels at your disposal and within your budget, from blogging to email marketing, from pay per click to local PR.
5. Always measure and tweak as you go along – It’s important to quickly examine the different marketing channels, their costs and the total revenue generated from those channels to decide whether to stop, tweak or invest more in a particular channel. If you haven’t already, I suggest you use Google Analytics, a free web analytics program from Google which can give you all the transparency you need and revenue per channel.
6. Don’t exceed a set CPA level – Cost Per Acquisition / Action is a term describing how much you can afford to pay to accurate a customer and your online marketing should revolve around this figure. For example, if your website conversion rate is 10% it means you’re converting 1 out of every 10 visitors. Now evaluate how much it costs you to drive 10 visitors to your website and you’ll have your CAP. In some cases the CPA might be acceptable, in other cases it won’t so make sure to stay within an agreed CPA.
7. Keep an open mind - Try, experiment and quickly react to market trends. Online marketing channels which are not working for you today might work in the future and those which are working for you today might prove too dear in the future.
What aspects did you take into account when you’ve decided on your online marketing strategy?
Guest post by Joseph Eitan founder of Photo Paper Direct. Joseph started the business a few years ago which now sales a selection of Inkjet media from large format paper rolls to iron on transfers.
Add comment February 26, 2010
How to Sell Portrait Photography
Don’t make it about price. Ask your customers the right qualifying questions and they can tell you exactly what their expectations are.
Continue Reading Add comment February 22, 2010
PhotoShelter/PicScout Help Photographers Boost Sales Reach, Copyright Protection
Marketing Solution: new PicScout/PhotoShelter partnership boosts photographer’s sales reach and strengthens copyright protection.
Continue Reading Add comment February 21, 2010
