Does your business model support your pricing?

Recently I have had a number of conversations with business owners who are finding it increasingly difficult to maintain a reasonable rate for the service they offer.  They report that more and more contracts are being won or lost on price. Yet others seem to have no problem earning what they are worth.

Sure, we are in pretty tough economic times and price will always play its part in business decisions. In my experience though,  price is rarely the most important factor when it comes to a clients list of requirements. If you find yourself having to discount heavily to win business here are some of the questions you should be asking yourself:

  • Are you attracting the right target market? Can your particular market segment afford the service you offer or do you need to look at new segments?
  • Are you providing value for money? How much value can you add to your client  and what is the net benefit of using your services?
  • Are you communicating the value of the service that you offer? Are you focussing too heavily on the price you charge at the expense of the benefits you are offering?
  • Is price the real reason you are not winning  business or is there something more fundamental, like your service level, holding you back?
  • Do you discount as a matter or policy? Discounting can give a client the impression and you don’t think your services are worth the full price.

It may be worth taking a closer look at your business model before blaming the  fact that you can’t charge what you would like on the economic climate.

2 responses to “Does your business model support your pricing?

  1. I like to say pricing strategy must be aligned to overall corporate strategy.

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