Small Business Pricing Strategies
by Sharron Senter

Its tough out there, particularly because of layoffs and our sluggish economy. So whats a small business entrepreneur trying to make a living to do? Try these low-cost pricing strategies to keep sales moving.

TACTIC #1 -- Never simply slash your prices, unless youre trying to empty obsolete inventory. Instead, try repackaging your prices so theyre more affordable in the short-run so more prospects can afford them. For example, rather than pricing your service for the year, Our monthly newsletter is only $39 for the year. Instead, try Our monthly newsletter is only $3.25 per month. If you accept credit cards, its very easy to set up reoccurring monthly charges that are billed to your subscribers without having to intervene every month beyond the initial account set up. The upside to offering your subscription on a monthly basis is that you can now market a $3.25 headline versus a more expensive $39 headline, i.e. youre able to offer services at a more affordable rate without slashing prices.

ANOTHER EXAMPLE
Heres another example. Just last night I was on the phone with a potential marketing client. As a small business owner shes trying to get some marketing help and is on a tight budget. My standard hourly consulting fee is $225, which is not always appealing to some businesses. However, in trying to work within her budget I suggested that my services could be more affordable for her if she allowed me to help her through email instead of face-to-face or on the phone. Lets face it, when youre on the phone with a client it takes longer to accomplish what youre doing since youre not only answering their questions, but youre building a relationship and talking about unrelated topics. Its difficult not to. In fact, you should! No matter what type of consultant you are, building a successful business is not about the initial sale, its about establishing a long-term relationship with customers. One-off sales dont lend themselves to growing a profitable business; rather, deep customer relationships do! However, since I was able to establish a trustworthy and comfortable relationship with my prospect on the phone, she thought my marketing services through email would be a win-win. Did I slash my prices? No, instead I found a more efficient way to offer my services, whereby I could offer them in less time and therefore, my client will pay less money. This strategy could work for business coaches, fitness experts or personal chefs, when the latter prepares meals in her home rather than in a clients home.

TACTIC #2 -- Create tightly niched product or service offerings. For example, if youre operating a personal concierge service, rather than just offer errand services at $25 an hour, try prepackaging specific errands with associated lower pricing. Why? Because you can offer a more aggressive price when isolating your fee to one particular service. If your customer challenges your reduced price as compared to your higher hourly fee, your response is simply, Im able to offer this lower packaged price because of economies of scale. While Im out delivering your bundles to the Post Office, Im also delivering packages for five other customers. Ultimately, your customers will never know how many other customers youre delivering for that day; however, the key is not to simply slash your pricing because you believe that reducing your prices will bring you more business. The key is to provide consistent and professional pricing practices.

P.S...Yes, business is slow for many entrepreneurs right now; however, be cautious with your pricing methods. Dont simply slash prices; instead incorporate long-term and short-term strategies that are always complementary to each other. If you offer a product for $15 today, then again at $35 six months from now, you must have your reasons in place, otherwise youll aggravate your customers.