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Pricing is not as difficult as it is made to seem. The first step to pricing is to research thoroughly. You are not going to be a business pioneer. You might engineer an improvement to an already existing market, and modify other things in it, but it is quite unlikely there will be an invention of an entire niche. This is a good thing, because it points out that there are people who already have existing pricing structures you can begin your research with. Research should cover what your competitors charge and the response of buyers to the charges. This helps you know how best to penetrate the market. You can appeal to dissatisfied customers with an incentive or maintain the same price as other service providers, if the demand is great. You can also increase your price if you are sure of great service delivery. When you have an idea of how much is being charged, you need to know the rationale behind the charge. This means you will have to do an inventory of what the cost of providing a service of that nature is. You will need to put your time, energy and resources up for consideration; staying mindful of the experience and skill you have gathered, and are currently leveraging. With this, you can be in the same space as your competitors, but will deliver premium results, and be able to charge differently from others. If it is a new business, you most likely have incurred some overhead costs. You will need to plan on how to break even, and this comes from your ability to make a profit. The best way to go about this is to spread your overheard cost over a period of time and input those costs into the pricing of your services over that period.
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The pricing strategy you can consider includes:
- Market penetration strategy: you can price at a ridiculously low rate, as a means to gain entrance into the market, and make a name. Once this is successfully achieved, the business owner reverts to the usual market price.
- Economy market pricing: this means you secure the best deal possible when incurring overhead costs, so that it has minimal effects on your pricing.
- Premium pricing: this entails projecting your competitive advantage to your target market, such that it remains their focus, and you can charge a premium to bring them satisfaction.
- Psychological market pricing: this deals with making the best use of emotional pain points and exploiting them for your business.
- Additional incentives: this is basically adding incentives to services, so that you get customers to spend more easily. What might not have been considered will suddenly get the attention of your audience when it is shipped together.
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