As a business owner, it is vital that you understand how to price your goods and services. And you need the right strategy to make sure that you're making a profit while still offering a great deal to your customers. According to TaxProEz, as professionals, we must decide whether the pricing the client will accept is acceptable to us because all too often we just accept the offer of our clients without second-thought, rather than thing on the value our services. The value of the time spent performing a task, is far less relevant than the value it provides to a client.
What is Value-Based Pricing?
Value-based pricing is all about focusing on the overall value and benefits that you offer to customers. This is in contrast to merely have the lowest cost product or service. With value pricing, you need to focus on the few differences that set you apart from the rest.
First, understand the difference between cost and price. The price is what you are selling something for. And this is typically all that customers focus on. You’re focusing on the cost of your product or service. No business ever wants those two to equal out, so you’re going to have to price in a manner that puts your cost at a much higher place than your cost.
How to Price for Value
To price for value, understand what your customers are already paying regarding money, time, and energy to deal with their current situation. For instance, if you sell window repairs that help people have more energy efficiency, then consider how much you could be saving them with your particular product. Do you offer stronger glass options? Perhaps a quicker installation time that appeals to them? Think of the advantages that the customer will reap if they pick you for the value that you have set.
Calculate how much they would be spending on their windows, in the example above that is not efficient. How many dollars are wasted each month? Then, compare this cost to your price and how much you save them over time.
Selling the Idea of Value-Based Pricing to Customers
Value pricing fails sometimes, to be completely honest. This is due to a lack of research and strategy. To sell the idea of value pricing to customers, you need to invoke some sales techniques and questioning skills. Ask them if they are delighted with paying more for their current situation instead of improving it. When they say no, show them how you are the best overall value, not necessarily upfront price, over time.
When it comes to modern-day business, you cannot survive by racing to the bottom. In the days before the web, you could have the lowest price in your market without much issue. However, today, with companies anywhere in the world being able to offer a lower price than you due to their lower costs of living, you need a better strategy. Leverage the value pricing tips above so you can charge what you're worth and serve your customers better. After all, think of how many brands and businesses (we have some faves) you visit and use because you like them for one reason or another? They might not be the cheapest on the market, but they have something unique to offer you.