One Person Business by Clive Morton

Author:Clive Morton
Format: epub
ISBN: 9781845285326
Publisher: Constable Robinson (eBook)

9

Pricing your product or service

It is often said that the market fixes the price and there is a great deal of truth in this statement. It sometimes makes you feel that all businesses operate in cartels but, nevertheless, where this applies, you need to have strong reasons for offering a different price. As indicated in Chapter 4 you can quickly establish what the market price or range of prices is by contacting established practitioners directly or indirectly. Most will give a clear indication about hourly rates but, quite rightly, hesitate to make a commitment to complete within a fixed period before seeing the job. In this respect it should be noted that an estimate is not usually legally binding unless turned into a commitment.

Those who prevaricate too much, however, are often seen as slippery and manipulative. Longer term this can be damaging. Problems are rarely provided for in family budgets so when they occur it is likely to be a financial problem for many customers and they will expect to be told up front how much they need to find and can become extremely irate if the bill comes in for significantly more than the estimate.

Cutting prices is sometimes seen as a way into the market and may be justified in the short term but something I would strongly advise against as an ongoing policy. Price competition must result in lower profitability for all practitioners in the sector and inevitably lead to some closing. If you did your original homework before starting up, you should have established the market had room for your services and that there is no need to cut prices. Nevertheless, pricing is a business tool and, if you are overwhelmed with work, you should consider increasing prices and vice versa.

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