Entrepreneur Series | Lesson 2: Incorrectly Pricing Your Product Or Service

In the first year of a start up operation, there is a great focus of energy from the new business owner on client acquisition. Gaining new customers opens the floodgates for the generations of revenue to pay the bills of the business. However, one of the tough lessons learned by young owners is not thinking clearly though pricing out the services of your business correctly.

Most new business owners tend to undervalue what they charge for their work and services in order to compensate for not being as established as their competitors. As long as you have a top notch customer service experience and offer a product or service that’s similar or better than a competitor, you shouldn’t devalue yourself. If you set this pattern up early with clients, it can be very difficult down the road to raise your prices with your initial customers.

Here a few tips to determining if the price is right on your new product or service you take to market.

  1. Shop The Competition–  As part of a new entrepreneurial venture, you should be doing some research about what kind of competition you have locally or on the Internet. Take stock of where your competitors have set the market rate, and place your prices relative to the value you believe you can deliver on in the market place.
  2. Beta Test Your Top 5- If you have 5 people you know who you are pretty sure will buy your product or service, consider throwing a red herring at them around your pricing structure. Gaining some valuable feedback from these customers could prove to be instrumental in bringing more like kind customers down the road.
  3. Offer Options– Having several options such as being able to pay annually or monthly, credit card or PayPal, or just a slight variation of choices of the same service will allow more new customers to determine the price that is right for them. Be careful about just picking one price point at the initial phase of the business.

This is part two of a ten part series on entrepreneurship. Many businesses fail in the first year because they incorrectly price their product or service. Make sure you focus on getting the price right!

Written by:
Ted Jenkin

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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves

Hey!

My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

Background and qualification information is available at FINRA's BrokerCheck website.

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