SUMMARY
6 Entrepreneurs Talk About Pricing Structure Strategies
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Question: When is the best time to re-examine your product or service pricing structure?
On An Ongoing Basis
“You constantly need to evolve and be able to change according to your customers’ needs to try to be better. Review and re-evaluate your product line and consider what needs replacement or improvement and keep up with this ongoing plan to get better sales opportunities.”
Early and Often
“Check your competitors. Know your value proposition. Figure out your cost per acquisition and break-even point – and set competitive pricing based on value. Don’t be greedy! All markets will find an equilibrium toward commodification. Globalisation, democratisation, devolution and ubiquity are strong macroeconomic forces that will force the setting of price. Research and watch the horizon.”
When There’s An Issue
“While I am a fan of at least partially reviewing your pricing structure on a regular basis (I’d recommend monthly), I don’t think a major re-examination or overhaul is necessary unless you’ve noticed an issue – a high volume of churn, for example.”
STEVEN BUCHWALD, Buchwald & Associates
When Your Breakeven Shifts
“Typically, for a business, you want to look at the breakeven. If you raise the prices slightly, those price hikes are pure profit, and you should take advantage of that. If you price hike enough, you can get 100 percent profit increase without an increase in business. There are so many factors you need to look at, and you should look for the best ways to optimise your pricing plans.”
When the Market Shifts
“Our agency is able to identify when market conditions (like seasonality, increased competition or diminishing demand) are changing from paid media channels such as Search Engine or Social Network PPC. The changes that impact the cost or volume of traffic can be compared against sales metrics to see if staying the course is feasible.”
This post first appeared on the Business Collective – an initiative of Young Entrepreneur Council, which is a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.
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