Practicing the art and science of pricing in your business

One of the secrets to business success is pricing your products properly, but it is also one of the trickiest things to get right - as the saying goes, pricing is part art, part science. If you can get your pricing right at the beginning, it can create a great foundation for your business, but get it wrong and it can cause huge problems for your bottom line. There are huge quantities of books and online resources to guide your reading on this subject as an entrepreneur, but a pretty reliable approach is to formulate your pricing strategy based on the following factors. Get to know your customers, monitor their buying habits and understand their price pain points. Know your operating costs and ensure you build them into your profit margins. Understand exactly what your sales targets need to be to ensure you cover all your costs and make a profit each month. Track your competition and monitor their pricing structures for similar product and service offerings. Keep on top of the marketplace, monitor upward or downward pricing shifts, and be prepared to make any adjustments where necessary. Finally, understand the pivotal relationship between quality and price, remembering that customers will often pay a premium for a higher quality of product or service. The bottom line is that there is a certain amount of flexibility in how you set your prices, but you have to be attuned to your customers and the marketplace to know what is going to be a price point that will work for everyone.