How to know if your prices are fair?

My simple price setting guide.

Photo by ANIRUDH on Unsplash

Deciding how much to charge for your products or services is one of the trickiest parts of owning a business.

It’s easy to get caught up in wanting to make a ton of money right out of the gate, and it’s important that you’re paid fairly for your time and expertise. But remember you’re competing with other businesses that offer the same products and services, so stay similar and competitive.

If you’re charging way more than your competitors, your target audience will go with the less expensive option 98% of the time.

In order to make sure your prices are right where they should be, you need to do a competitive analysis.

If you’re a local business, look at other businesses offering the same product or service and go check them out. Visit their store or try out their service. What do you get for the money? Is it better, or maybe not quite up to what you’re offering? Then it’s simple if your service is better charge more and then use the “extras” you offer to explain why you charge more. If they’re better, how can you position yourself as the better deal without making yourself look cheap?

If you’re an online business, do the same thing, but do it by searching Google to see what keywords they rank for, visit their website and social media, and ALWAYS sign up for their newsletter (with your personal email).

Doing a competitive analysis can sometimes give us imposter syndrome, but it’s important for the sake of your business. Stay objective and focus on the facts.

Here are the 3 simple steps I take when doing a competitive analysis for my clients and my own business:

1. Google. If they don’t exist on Google, they don’t exist…JK! But seriously,
   Google your competition and see what comes up. Then google some important keywords to your business and see if they come in the results.
   
   Why is this important? If they come up at the top of all your searches, they win the SEO game. This means they either have really good content or spend money with on paid ads.

2. Social Media + Newsletter. I visit all their marketing channels to see the good, the bad, and the ugly. How are they interacting with their audience? Do they have a large following? Do they have a newsletter? Is it good?
   
   Why is this important? Because, more than likely, their audience is your audience. So by checking out their engagement, you can build an effective content strategy. This will also help you determine how much value to give away for free.

3. Buy Something. It’s the only way to know the quality of what you're competing with. This will also help you understand what you can do better or differently to make your product or service stand out.

PRO TIP:

If you haven’t done a competitive analysis in the last year (or ever), you should add this to your to-do list this week. Take 30 minutes to research, and use that data to drive your decisions moving forward.

Once you finish the analysis, you’re ready to build a Pricing Matrix. We use this to determine every aspect of our pricing, including margins, shipping (if you offer physical products), wages…etc. (Net vs Gross)

If you want to learn, step-by-step, how to build a pricing matrix, join us live today at 12 pm CST.