There are some industries where pricing is very straightforward, a hotel for instance might operate on a cost + x % basis for selling bottles of wine in the bar whilst the chef will have a Gross Profit (GP) target to meet in the kitchen.
For other businesses, the process of setting a fair price is often not so simple and rather than having one set price, you might have to calculate every single project or job individually. You need to consider factors such as available stock or time, client budget, competitor prices, quality and quantity, level of business and the value of the work to your business.
With all of these variables we can say one thing for certain…If you have a single price for your product or service then that price is wrong.
Well, let’s just qualify that rather bold statement slightly because in just the same way that a broken clock tells the right time twice a day, the single price will occasionally be correct.
So, what to do with pricing?
Of course there is the old finger in the air technique but that’s hardly the basis for a sound and profitable business is it?
A much better idea is to consider your pricing with care, of course you should maintain the ability to negotiate and be flexible but having a ‘Magic Price’ that has been calculated properly and sensibly is a far more sustainable prospect.
It also saves time because rather than pricing each project or product every time you have an enquiry you will have a base from which to work.
We love helping our clients to find their ‘Magic Price’ and if you would like to know more about the 4 key elements of setting the right price then please get in touch…it really is a lot more straightforward than you might think!