When we’re marketing our products, it’s important to set prices correctly and appropriately. How we set our prices can have a variety of implications on our business. Many small businesses use their prices to compete in the markets, create different revenue scenarios, and change their market share. Understanding how pricing will affect your business will help you in the long run. So what are the things you need to consider?
The Effect of the Price on Profit Margins
The price you set will affect your profit margin per unit, but if you set higher prices, this can result in lower sales volumes, therefore eradicating your profits.
The Effect of the Price on the Sales Volume
An increase or decrease in sales volume may force you to slightly tweak your prices. If you lower your prices, you could increase your profits, but it’s important to test the response of the market price increases before you implement big changes across the board.
Price and the Message it Sends to Consumers
This is going to have a direct impact on your brand and image. If you set products at a higher price, this is going to tell consumers you have higher quality, but other consumers will look for a bargain so they will get the quality they need at a lower price.
It’s important to remember that pricing your services properly is pivotal to being a competitive company. It’s so important to track your pricing, but it’s also important to track your competitors too. The infographic below provides more insight into how you can track competitor pricing to better position your business.
Infographic designed by Assosia