Small Business Pricing

Restored from the Empower Network archive (2011–2017), lightly edited to meet our current advertising standards. Views are the original author’s.

One of the biggest challenges small business owners face is, understanding their pricing strategy relative to their success. As a small business owner whether online or primarily as a local neighborhood business, you must understand something I have found so many owners do not fully appreciate. The pricing of every single piece of product or service you sell, must allocate a portion of your direct cost, overhead and profitability.
The mindset of so many of my contractor students was that they would succeed simply because they could beat the competition’s pricing. I’ll never forget something one of my students said, when I brought up this topic. He said, “Well, we can always write it off as a loss and thus save on taxes, can’t we?” That’s not why you are in business!
You are in business to earn a profit. Your small business success depends on how well you understand and create value, not only for your customers, but for yourself and others as well. That’s why in a previous blog I spoke about the importance of understanding your role with respect to financial management and the offer of value to your small business clients.
You need to fully understand that your ROI or return on investment will play a significant role with respect to your business, whenever you need or wish to sell it. So it is vital that your game plan is valid and subject to your review in a timely fashion, but also with your financial advisor or business coach.
Interestingly enough, I have been doing some research lately, and came across something so many businesspeople don’t fully comprehend, and that is the value of strategies. How would you define one? Here is a very clear definition I believe we can all appreciate. A strategy is a carefully devised plan of action to achieve a goal, or the art of developing or carrying out such a plan.
That plan must accommodate the needs of others as well. Whom you might ask? The very people within those relationships your business relies upon. After all, your business depends on those relationships in order for you to succeed.
So where do you go from here? Begin by asking yourself if you truly believe you understand small business needs, for success and growth, and whether or not your small business pricing meet those needs. Have you truly developed a strategy for your growth and ultimately your ROI?
Which of these relationships might you want to explore as you choose to expand your strategies? Those with your investors, lenders, advisors, suppliers, distributors, marketers, your landlord, employees, your customers, your community, your family and the one you have with yourself.
Progress is essential to success, and once again your success in your small business hinges upon your commitment to true risk taking, and not fear.