Pricing mistakes to avoid

Here are three pricing mistakes made by many startup (and even mature) companies:

1. Not charging enough. This is often a mistake made by consultants or other folks who sell their personal services. Some people just don’t believe strongly enough in the value of their services that they don’t price them at what they’re worth. Others mistaking think that they need low prices to be competitive. When pricing, always take a realistic view of the value your services or goods provide, and price accordingly. I’ve written before about situations where consultants lost  deals because they under-priced themselves, leading to perceptions of inferior value.

2. Never raising prices. Many people working for wages expect annual pay raises that will at least cover the increase in the cost of living. Yet consultants often set a rate and seldom, or never, consider increasing the rates. Small increases annually will generally be well accepted – make sure you notify existing clients in advance – and will prevent the need to make huge increases at some future date.

2. Negotiating prices. Never, ever, negotiate price. Doing so devalues your product or service in the eyes of the customer. If you give into a customer on price, the customer will wonder a) if the the price was actually too high to begin with, and b) how much lower could the price go with further negotiation. If a customer objects to price, negotiate on features or other deliverables to fit the total cost into the customer’s budget. Always make sure the customer understands your value proposition.

Will Limkemann

www.siquagroup.com

3. Raising