One of the most common mistakes we see in new businesses is under-charging for products and services.  New business owners often think people will choose them over their competitors if they offer a cheaper price, but that vastly simplifies the buying process and ignores the fact most people buy based on value, not price.

If you’re using price as your only unique selling point, what will you do if your competitors reduce their price?  If your competitors are larger, they can probably afford to do this (should they choose to).  This reaction often leaves you with little option other than to lower your prices – and cut your profit margins – further.  (And that’s not the best business decision you can make – you’re no good to any customer if you’re out of business.)

Before you set your prices, look at the market value of what you offer and ask whether you want to be known for being the cheapest.  If not, how can you add value to your customers and give them something different than your competitors?

If you operate in a ‘commodity’ market (e.g. lots of competitors offering similar products) you need to consider USPs very carefully.  If you fail to differentiate yourself, you will give customers no reason to choose you over your competitors.  We’ll add something to the members area of the site shortly that will help if you’re in this situation.