Pricing path to success
Pricing a product or service for your business is a critical step in putting the business on the path to success. This is because price is the representation of everything you do in your business - from development of the product or service to marketing the offering, then building your customer relationships. Price is essentially the tangible object that will ultimately bring together all the working parts of your business.
For an online business operator, price plays a critical role in most decisions within the business. It will influence what products or services you will produce; what quantity will be produced; how the offering will be produced and even from where the inputs or production will occur. Taking this view on price will help you appreciate the full effect of both your revenue and your expenses.
So that’s you, but what about how your customers see price? For customers, the price is the tangible element that will allow them to determine the value in your offering. The more you meet the needs and exceed the expectations of your customer, the higher the perceived value in your offering, and in most cases, the more they will be willing to pay.
When an online business is clear about its value proposition, it can exceed customer expectation, offer superior value, and continue to set itself apart from competitors. By offering a highly differentiated product or service the business is able to charge a higher price.
In order to really understand how to harness the appropriate pricing for your business, the application of key financial models is essential to set pricing strategies and operate your business.
© RMIT University 2016