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Common Mistakes in Pricing

There are some common mistakes that entrepreneurs make in developing their pricing strategy. Watch Ken Burke explain more.
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So, when you’re setting price. I want to give you a couple of tips that I’ve learned over the years. First, test, test, test and then test again. The best thing you could do and the best piece of advice I can give you is test your price and you can really make sure that you can get at optimized for the right level. So, as you’re testing pricing, I want you to look at two things. One is, either setting a slightly higher price or setting a slightly lower price and there’s a cause and effect relationship that goes on here. You set a higher price. You actually might have less sales and the first thing you might think is “No, no.
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no, I don’t want less sales” but it might be worth it to sacrifice some sales of small incremental level of sales to actually get more money overall and more profits overall. You need to do that math equation or the other scenario that could happen is that you lower price a little bit, you pick up more market share and you pick up more sales overall and by doing that you actually might be much more profitable as well. So, I want you to look at that and try to balance that there is a sweet spot though. There is a way that you can maximize the margin that you’re getting and the sales level at the same time.
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So, I wanna wrap up with some common mistakes that I see entrepreneurs make all the time. First thing, as I said before and I said again, don’t guess at the price just guessing at the prices is the biggest mistake that you can make because, we’re giving you a ton of tools to be able to optimize your price. Why would you actually go and guess out of it? The other one is not knowing your margins, your direct marketing. I guarantee you if you walk into an investor meeting and you don’t know your direct margins, you’ll be thrown out.
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So, make sure you don’t make that mistake but also don’t make that mistake to your business cause is so easy to calculate them. You don’t want to go wrong there. You don’t also want to make sure that you don’t price your product below your margins. Get to know your margins in orden to optimized that price. The other thing is that if you know your margins but the margins are low as you move forward with your business anyway, that can be a very dangerous move, It’s a huge problem. Let’s say that you have 25 or 30 percent margins, which are most likely to low even in your industry.
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That may be a really even big red flag to say, “I better not start this business, I better hold back”, so consider that. The next mistake that I actually see is, well, which I don’t quite understand why people do this but, forgetting to add value to your product or service, there is in every product or service that I’ve ever seen there is value that can be added if we just spent a long time given you a lot of examples on how every business that we use as an example can add value, so I guarantee you that you can add value to your product or service and that’s going to jack up your price, and you want that, you want that for your business, you want that for your customers.
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Underestimated your direct cause, is another problem that people say “Oh, you know, I’ll just guess at my direct cause and I may not include everything”. You’re just going to get caught down the road by by having cause that exploding and not being unable to cover them. That’s not a good situation to be in. You might know how is work all out now, at the end of the day It’s a math equation. It’s pretty easy to figure out. And it finally setting your price too high.
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You set your price so high that you’re outside the acceptable ranges, you’re outside, and people just ignored you, because you’re so far from the competition, you don’t want to do that either, and also can be very dangerous and ruin away the created of your business. So, let’s make sure that you don’t make any of these mistake we’re giving you all the tools in this exercise to figure out your optimal price. This is gonna lead to business success for you. And this is going to lead to maximum profitability for your business.
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How to Create a Profitable Pricing Strategy

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