Establishing Competitive Prices
Pricing is a key to sales success. With that in mind, you need to continuously monitor the pricing of goods and/or services in your industry. It's fairly simple to check the prices and fees of competitors in person or online. However, competitive pricing will also fall in line with what you provide.
Can you justify charging more for personalized attention? Can you provide adjunct services that your competitors can't? Conversely, if you are the fast-food equivalent of your industry, can you offer the basics at a lower cost, with no frills or specialized services? By streamlining your operation, can you charge $.50 less per widget than your closest competitor?
Factors influencing competitive pricing include:
- Direct Competition. If a direct competitor is beating your prices and you cannot justify keeping your current prices, you could end up in a price war. To avoid such a battle, provide something extra that your competitor doesn't offer and adjust your pricing accordingly.
- Region. Almost all products and services will cost more in New York, San Francisco, or Los Angeles than in the rest of the country. Use competitive local prices instead of national industry-wide prices as your guide.
- Your Demographic Group. Most industries have a price range based on the demographic group that they target. For example, if your eatery is geared toward college students, your prices need to fall at a lower range than if you open a fine restaurant for an upscale clientele. Stay competitive within the price range for your demographic group.
- Technology. The latest technology can change an industry very quickly. If you fall behind, your prices could be affected. Therefore, keep up with technology and you will benefit your ability to maintain competitive prices.
Continue to monitor prices to stay competitive. Trade shows, conferences, and industry associations are good places to garner information. Always try to stay updated on industry trends so you can plan accordingly.
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