Savvy Solos, get to grips with your pricing strategy with these tips!
I’ve been inspired by a discussion I had with other small business owners during a masterclass with Digital Sparkles and the NBSL.
I realised that small and medium business owners are often overwhelmed by pricing strategy. Nevertheless, pricing can have a huge impact on the success of our business. So, I wanted to share some of my tips on how to define your pricing strategy.
‘Price your services/products with regards to how much you need to earn and will allow you to at least make a living from your work. Don’t go for low pricing as it might send a message to your customers that you offer a cheap commodity. If you’ve got customers, this is because they need your skills and you’ve already sold, so don’t underestimate yourself’.
What should you look at to define your pricing strategy?
You need to do some research on your competitor’s pricing strategy. This means not only collecting their prices but also looking into their offer/packages, their add-ons and the kind of customer they target.
But there are also other aspects to take into account to define your pricing.
Some of them are related to you and your business like your unique selling point, your branding, your business goals. You can control and adjust them if need be. Sometimes the reality of our market just forces us to do so. So, try and stay realistic.
The reality of your market includes, for example, the structure of your industry, your overheads or your customer’s behaviour. These aspects are not totally in your control, so you need to give a closer look at them. They are some constraints that you’ll have to deal with.
Where to find information to define your pricing strategy?
As said before, you’ll have to perform a competitive analysis to base your pricing strategy on facts. This is essential. You can’t define your pricing strategy out of thin air or only based on word of mouth. Facts are stubborn, so stick to them!
If you operate as a SMEs, you can follow these steps:
- Have a look at your competitor’s websites and social media channels. You sometimes will find their pricing or some special offers that will give you some insights.
- Subscribe to your competitor’s email list. You may see some of their offers through this channel of communication.
- If you’re a freelancer/solopreneur, dig into freelancer platforms such as upwork.com, guru.com, freelancer.co.uk or peopleperhour.com for example. You’ll find people who offer their services and indicate hourly or daily rates. You’ll also find job offers that will give you some information about what your potential customer could be happy to pay for similar services.
This article gives you a lot of websites to perform this research: 79 websites to get freelance jobs fast
- If appropriate, buy from your competitors. This is an old-school way to find out about their pricing strategy but it works. This can be a bit easier if you sell products rather than services. Don’t forget to keep your budget in mind. Use this strategy if this is worth it.
- Discuss with your peers in your network. You’ll be surprised how some people are willing to share information with you.
- Finally, don’t forget to ask your customers as some of them might already have access to your competitor’s pricing.
What to do with all the information you’ve gathered about your competitors?
Once you’ve gathered all this data, you’ll need to analyse it, so that it makes sense to you for your business:
- Find the lowest and highest rate in your industry
- Analyse the packages that match yours for comparison
- Don’t forget to include in your analysis all the other aspects of pricing mentioned earlier
The idea is to define segments which take into account parameters such as the industry, the customers, the offers and associate a range of pricing with each segment. Then, if you find some similarities with your offer, this will give you a chance to amend your pricing.
With all this information in your hands, you’re ready to define your own pricing strategy – above all, stay true to your values and to your customers! You are a small business owner, which already makes your offer unique!
If you still feel lost with your pricing strategy, have a chat with people you trust in your network like we do at The Savvy Solos Business Club or seek for support from market intelligence, business development and marketing strategy experts.
I hope this blog has been useful to you!
Do you have any tips to define your pricing strategy? Please share them in the comments.
If you have any questions about competitive analysis, please contact me!
Julie Defoort – Market Intelligence Consultant at Julie Defoort Consultant