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Setting Pricing is Key

February 13, 2020 by OSYB Staff

What do you know about pricing and it’s importance, beyond setting a price that covers costs and adds profit to your product or service? Knowing how to price also means that you know your customer, the best chosen price sells your product, reveals your business story to the customer, and becomes a guide to choose your costs.

Entrepreneur.com sheds some light on why you should think about pricing beyond the obvious:

  • When your price is right, the customer experiences profit. ” The customer’s profit is the difference between the price you charge and the benefit they receive. Thus, a deal they cannot resist is one where their benefit by far exceeds the price they have to pay. A happy customer is a profiting customer.”
  • Price provides customers with information and sets expectations. Price sets expectations about quality and customer service.
  • Price determines cost. ” Choose production process, materials and quantity produced based on the expected price, not the other way around. Cost is the entrepreneur’s primary choice variable.”
  • Price is set by the customer. It is your job to discover the price not to set it. Price setting is determined by what is best for the customer and not by what you need to cover your costs. ” The right price is based on the value the customer expects, and thus the “profit” they make from your product.”

For full article: 4 Reasons Why Pricing Is the Key to Startup Success

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