Money Challenges for Business Owners: How to price your product or service

Being a business owner is a labor of love and can sometimes be tough. You are faced with challenges and many of those challenges focus around money. While the challenges of owning your own business vary, all business owners can agree they are waiting for the day it finally gets easier. 

As your business grows, you will work through the challenges, learning how to solve problems faster, be a better leader and ultimately have a profitable business.

The first challenge when dealing with money is:

How to price your product or service.

From our experience, all business owners will realize their prices are too low and need to be increased. This can happen as a new business, but can also impact established businesses. As you add services, pricing should be top of mind.

We get scared that if our prices are too high then people will not purchase our products and services. Eventually, you get frustrated that you are working so hard and not getting paid what you're worth. Increasing prices becomes inevitable.

We want to avoid the stress that comes with this decision.  The goal is to price your products/services fairly for the customer, but also you. You need to get paid and paid well!

Start by making a few lists:

• What are your costs to produce the product or service that your customers will be purchasing.

• What do your competitors charge and what does that price include?

• What sets you apart from the competition? This list will help you determine what value your product or service has to offer.  For example: Your product/service may be the best quality out there by a landslide.  This helps you internally justify charging more.

• What you would like to charge for the product or service?

Review all of the lists and ask yourself the following questions:

1. Are your costs of producing the product/service less than what your competitors charge? 

2. Are your costs of producing the product/service less than what you would ideally like to charge?

3. Do you feel comfortable charging your ideal price for the product/service?

Make sure to do your research and know you have a profitable business model! If your cost to produce the product/service is greater than what you can charge, you do not have a viable business and you will need to go back to the drawing board.

The point of this exercise is to find what price you would be most comfortable charging. 

Chances are, it will be lower than what you will eventually want to charge. If you don't feel confident in the price you are selling your product or service for – people will know and question whether to buy. 

Let’s simplify all of this...  Just pick a price. 

Don't think about it anymore, knowing that you will scale the price with time and experience. 

Evaluate your pricing every month.  If that is too often, then you can do it once a quarter. 

You need to make sure that the price is above the cost of producing your product or service.  If you are below cost, you would be giving it away for free. 

We understand that business owners just want to get their product out there, but from our experience, this just makes it harder to charge what you really should be charging. 

You are following your dreams and putting great things into the world. Don't sell yourself short!