The Price Is Right. Or Is It?
For any business, pricing should not only cover the overhead costs to run the business but generate profit too. However, setting the right price for any product or service can be tricky - especially for start-ups. Entrepreneurs often set prices based on the cost of production and don't consider the various operational expenses like licenses, taxes and compensation. Additionally, many owners don't take into account intangible factors like customer service or convenience provided by their product or service.
In the recent Wall Street Journal article, "The Price Is Right. Or Is it?", Deloitte Consulting LLP's Julie Meehan talks about the objective of pricing and how business owners can better understand the true value of what they are selling. Co-author of the book Pricing and Profitability Management: A practical guide for business leaders, Julie discusses why price is one of the major aspects in developing the image of any product or service. “One way to determine market value is by asking customers, through surveys or interviews, about what they are willing to pay,” she said. “Then, monitor how the prices are in the market and how the competitors respond and make adjustments accordingly."
You can get a sneak peek at the forthcoming book, Pricing and Profitability Management: A practical guide for business leaders, here.