Founder and CEO of Ariatu PR Ronke Lawal is my guest blogger today and has kindly given us this interesting angle on Pricing your products and services
It comes as no surprise that generally deciding on a price can be one of the most challenging and awkward issues for most entrepreneurs and business people.
Quite often you worry about whether you are pricing yourself too highly or whether you are charging enough money in the first place. It is a confusing and sometimes difficult subject to deal with but it doesn’t have to be.
Clearly if you are offering a product it can be pretty straightforward; once you do your research and account for the market that you are targeting it should be relatively easy to set a price. The cost of production, labour, materials and the added value to the consumer will all come into consideration. By added value I mean the difference between economy and luxury. Some people want to pay extra for that perfect luxurious finish, others are not too bothered about the fine details and just want the basic model. This is where knowing your market is essential and why market research can make or break a product launch.
If you offer a service it can be a lot more difficult as many businesses know only too well.
What I have learnt and am still learning is that it is not necessarily the price which scares the potential client away, it is the actual prospect of paying it (the idea that at the end of the month they’ll have to deal with another bill is the scary part). If you have “wowed” a potential client up to the point that they are confident in what you have to offer then price should not overshadow their desire to work with you. If you are offering the best quality service available and can back this up with quality recommendations and a strong portfolio the right client will be willing to pay your price, your price will ALWAYS be right because your service is worth it. Many of my most successful clients are the ones who have been confident in their pricing and in their product range. That confidence means that they have what it takes to sell to their desired client base.
If you want to succeed in business you must steer clear of the notion that cheapest is best or that you are not WORTH what you say you are. De-valuing yourself is not going to necessarily increase profits in fact its far easier to maintain your focus on attaining those clients who will pay than to try and get MORE clients who’ll pay less.
My top tips for pricing:
Know your value – how much do you feel your time is worth and how exceptional is the quality of service/product do you think you can offer to justify this? Once you are sure of this pricing becomes easier.
Negotiate Vs Donate – Be clear on the differences between these 2 terms. Though its fine to donate time to increase exposure or gain interest be sure to know when to stop. Negotiation is often key to getting a new client but try not to undervalue your products/services. The time taken to negotiate a reasonable business package should not be time spent donating free business services/support to a prospective client.
Be Realistic – Trying to sell a bottle of apple cider at the price of champagne is not realistic pricing no matter how good the cider tastes. Do your research and calculations; and offer a realistic price for whatever you are offering.
Check out the competition – Research your competition thoroughly. It always helps to know how much people will be willing to spend on similar products/services as your own on the market.
Company founder Ronke Lawal was born in Hackney, East London of Nigerian parentage. Having graduated with honours from Lancaster University and the University of Richmond Virginia (USA) with a degree in International Business (Economics), she started her own PR and Marketing business in 2004. In 2011 Ronke Lawal was honoured to receive a Precious Award for Inspirational Leadership. In January 2010, Ronke became the Chief Executive of the Islington Chamber of Commerce where she remained until the end of 2012 and became a non-executive director of The Hoxton Apprentice in 2011. She joined the board of Trustees of Voluntary Action Islington in 2012 where she is also a Director of The Voluntary Action Academy and is currently on The Employers Panel for the National Employment Savings Trust. She is a Mentor for The Cherie Blair Foundation and for The Elevation Networks Start Ups Initiative. She is currently on a Board Member of TRiBE, An Empowerment not for profit organisation which aims to give young black women opportunities to thrive.
Apart from her active business interests, her varied passions outside the businessworld include food, travel, music, literature and most importantly living a life she loves. Her love for food led her to create The ‘Who’s For Dinner?’ food blog – www.whosfordinner.com.
Ariatu PR represents clients in a variety of industries including the entertainment, fashion, lifestyle & beauty, food and luxury goods sectors with a particular interest in the Africa/Caribbean Diaspora community.