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Women: Are You Selling Yourself Short? (cont)
Equity & Social Justice
Another reason we might underprice is that we want to have our service and
products available to a wide spectrum of people, not just those with higher
incomes. This comes from valuable ideals of social justice. Instead of lowering
our prices across the board, perhaps to the point of inadequate profits, we can
offer unadvertised discounts or sliding scale prices, when appropriate. Another
approach is, in our marketing materials, to invite prospective customers to inquire
about opportunities for low-income people. If we offer too much at low prices or
pro bono, we may end up out of business. Then we can’t help anyone!
Sell On Value, Not Price
The key benefit of our product or service should not be having a low price or the
lowest price. This turns our product or service into a commodity (as in the Vlasic
pickle story), which is something to be avoided at all costs, no pun intended.
We will do best to sell on value. Lowering our prices may result in competitors
lowering theirs, so we gain nothing and actually lose. As Bill Caskey wrote in
Same Game, New Rules, “The real question is not "what's the price?" although
that is what the prospect asks. It's really, 'Is there value in changing from my
current situation without this product?' ”
Cash Flow
Sometimes we need cash quick, and lowering prices can accomplish that.
However for long-term profitability, we may need a higher price. Remember, our
product or service helps people solve their problems. The good news is that there
are plenty of problems to be solved. So if some potential customers find our
prices too high and we have fully explained the value they’ll receive, we can let
them go, knowing there are plenty who will see the value and buy from us.
Changing our pricing may not be the solution, but rather developing our
communication skills.
Raising Prices
It’s the same with raising prices. We may gain customers. However competitors
may raise theirs, too, and keep their existing customers. If we raise prices and
sales decline, it’s not automatically a bad thing. We need to examine our net
profits. If our profits are the same or higher, we’re okay. Also, if sales decline,
we should see if there has been an overall market decline, rather than a decline
in our market share.
In summary, analyze the pros and cons that affect various pricing options you
have. If you have extensive industry knowledge, trust your intuition on pricing.
Review your pricing frequently, but don’t change it frequently. It’s good to
experiment in the beginning, but after the start-up phase, change your pricing
only if there is some fundamental change in your product, service or market. Do
your homework, experiment scientifically, and don’t get yourself into a pickle!
About The Author
© 2003 Authentic Alternatives. all rights reserved in all media. Anne Alexander
combines 20 years of small business experience with professional coach training
to provide “Breakthroughs Coaching” to people who want to do well by doing
good. Anne’s clients are socially responsible business owners and professionals
who make a positive difference in their communities. They work with her as their
strategic partner to have more time, more money and more fun.
See what her clients say at http://www.authentic-alternatives.com
You can contact at <anne@authentic-alternatives.com>
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