Answer: Getting their pricing strategy wrong.
A recent survey of 1,000 business owners by Hitachi Capital looked at what SMEs thought their biggest mistakes were.
Getting their pricing strategy wrong was the second biggest mistake of new start-ups, and of those who said this, more than half (57%) changed their pricing as a result in their first year of operation.
Pricing is one of the most important drivers of customer value, revenue, cash flow and profit growth, and yet all too often, most people don’t give it enough thought.
In our experience, people tend to use a combination of the following to create their pricing:
– cost plus margin pricing
– competitor based pricing
– day rates or hourly rates
– market driven pricing
– minimum margins / mark-up policies
– copying other suppliers / competitors.
What things do you take into account when setting your prices?
There are plenty of simple pricing strategies that any business can use to improve pricing in a way that will keep your customers happy and drive profitable growth.
If you’d like to know what they are, get in touch with us.