All ABOUT PRICING FOR SMALL BUSINESS
Definition of Pricing- Pricing is a process of fixing the value that a manufacturer will receive in the exchange of services and goods. The pricing method is exercised to adjust the cost of the producer's offerings suitable to both the manufacturer and the customer.
Pricing is the Key to Increasing Profits. Pricing is important because it's a major factor in a customer's buying. After all, profit is the ultimate output for businesses and products or services to customers.
The better-quality product is proportional to higher prices. Many new businesses are trapped in how to price their products. Some check their competitor’s prices. Some calculate their manufacturing cost and add profit to it and sell the product. Some display the high prices and provide discounts from 10%to 50%.
No matter what type of product you sell, the price you charge your customers or clients will have a direct effect on the success of your business.
All prices must cover costs and profits. The most effective way to lower prices is to lower costs. Review prices frequently to assure that they reflect the dynamics of cost, market demand, response to the competition, and profit objectives.
Prices must be established to assure sales. A strategy is required to define the pricing of our business products and services

How to Set Up a Pricing Strategy
1. Growth of business
The most important thing to consider before you pick out a pricing strategy is to know that this option will define the outcome of your business entirely, from how the revenue will grow over the years to how the actual business and teams will be built. The products and/or services that you sell will have a huge impact on which pricing strategy you choose.
2. Market research for the next 5 years
The second important point to consider is that as your business grows, you may have to rethink your pricing strategy as well. What was a good strategy for you as a start-up, may not be a good strategy for your business to sustain in the market five years down the line. Conduct deep market research before you decide on what is right and what is wrong.
3. Choose the price that is right for you
Let us have a look at some of the pricing models.
- Cost-Based Pricing: As a retailer, you first analyse what the actual cost of the products is, and based on the cost of production, the business increases the pricing to a certain percentage to accommodate for profit margins.
- Value-based Pricing: Value-based pricing is perhaps the most sustainable and long-lasting pricing strategy. Value-based pricing is a system of pricing used to price products at a cost higher than their markup price. Value-based pricing is based solely on how your consumers perceive your products, and how much your target demographic believes your product or service is worth.
- SaaS Pricing: This refers to “software as service”, where another company hosts an application or product for the customer and the customer can access it through an internet connection.
- Freemium Pricing: In this pricing model, as a business, you offer your customers a product or service for free, with the expectation that they will be hooked on your service and eventually demand more features.
- Competitive Pricing: The business analyses how it wants to be perceived vis-à-vis other competitors in the market and then bases its price on the prices of these other businesses. The company could try to slightly undercut its competitors, with the risk that the competitors would match this pricing and start a downward pricing spiral. Alternatively, the company could try a more premium approach and set its price above competitors.
Here are a few tips to keep in mind for planning pricing strategies
Tip 1: Feedback-While feedback is an important part of conducting any sort of customer research, be sure that you are taking feedback from paying customers.
Tip 2: Change your Strategy- As we have said earlier, your business will ebb and flow over a given period of time, your demographic might change, your market might change, and your customer preferences may change as well. That is why we recommend periodically reviewing your pricing strategy. This will allow you to not only stay abreast with the demands of your customers, but you’ll also be able to review how your competition is doing.
Tip 3: Selling your Company- It is normal to face some resistance from potential customers and to think you need to lower your prices to cater to them. Focus on the value of your business and build your brand. Lowering your prices is never the right option for any business. You don’t want to attract customers who cannot pay full price for your products or services.
Tip 4: Avoid Negative Connotations- When trying to sell your product or service, you must always remember to avoid using arguments that are negative. For example, when trying to sell a service or good, instead of saying that “Our product will reduce the number of employees needed for XYZ task” try saying “our product will help your employees be more productive”.
Tip 5: Reward your Loyal Customers- The one sure-shot way to make sure you maintain loyal customers throughout the lifetime of your business is by rewarding your loyal customers. Give them loyalty points, or offer them products and services before they hit the proverbial shelf of your store.