Today’s entrepreneurs have an advantage over their predecessors who had limited access to information about the market when starting a business. The digital revolution has provided potential small business owners with reams of relevant data. Yet still, small companies cease their operations often because many of them do not realize all the factors that go into making a successful business. They often focus on their own area of expertise, be it manufacturing, sales or marketing, without paying attention to all that it takes to set a business apart in such a competitive era.
Despite its deceivingly simple formula — retailers need to price high enough to bring in a significant profit but not too high to allow competitors to win — pricing is challenging, especially without a competitive pricing analysis.
Marketing Only Goes So Far
The best and the worst thing about online marketing is that everyone can afford it. However good a retailer’s marketing campaign is, competitors can always do the same or even better. This is where pricing jumps in, becoming the biggest battlefield, where better technologically-equipped businesses win.
Hard to Hide
Today customers tend to go online in the search for a better pricing offer before making online and offline purchases. They are presented with an array of similar or the same products sold by a variety of retailers and priced differently. A significantly higher price can make a retailer an outcast in this scenario.
Profit Margins
Many young SMBs make the mistake of starting with selling cheap. This leaves them vulnerable to an early hole for the business, out of which no amount of sales might help them dig. Understanding the timing of a sale or pricing change is just as important as knowing how much to take off the tag.
Pricing is by no means a simple area of business to navigate, especially for a recently launched company. It is one of the most important factors pertaining to the long-term health of a business, though.
