One-Person or SOHO Business: Putting a Price on What You Do
As a one-person business, you may be struggling with that part of your business plan that deals with how you should price what you are selling. Pricing is a balancing act that takes into account
The costs involved to provide your service or to make your product
The prices competitors charge for similar products or services
The pricing level that best reflects the value you offer and that your customers seek
What you need to deliver an adequate profit to your business
Here’s the dilemma you face: If you charge too much, your customers won’t buy. If you charge too little, customers may interpret your low price as an indication of low quality and choose to buy elsewhere.
So, what do you charge? When determining your price tag, think about
How customers perceive the value of your product or service.
How you can offer customer-responsive pricing. If your customers seek a wide range of solutions from your business, consider charging a base price and adding costs for extra features and benefits, thereby tailoring prices to your customers’ choices. Consider tacking on an extra charge for rush jobs, especially if they cost you more to deliver.
How often you can adjust your pricing. Retailers can shift pricing as they bring in new lines or offer new promotions, for example, giving them great pricing flexibility. To build in flexibility, many service companies provide project estimates based upon their current rates without actually stating hourly fees.
This approach allows the service provider to maintain pricing flexibility. You can maintain flexibility in pricing by using the option of strategic discounting, which simply means reducing the prices of key products or services as a way to move inventory, attract a new customer base, match new competitors, or meet other objectives.