Small Business Pricing Q&A

I found this surfing recent pricing news: a small business pricing Q&A in the Houston Chronicle. It touched on a concept that PPS has focused on for many years, and that deserves revisiting in the current economy - one in which small businesses can most certainly thrive if they play their cards right:

"Finding the right balance among all the factors involved is more art than science. A common misstep, especially in the early stages of a business, is pricing too low to attract customers.

"While special deals can work in some cases to start the ball rolling, going low is not always the best path. Low prices can draw customers interested only in price. They are the ones most likely to abandon you the moment they find something lower. Selecting excessively low pricing levels to attract clients is even more dangerous for service businesses. You only have so many hours to sell. Your business can’t make it up in volume like a retailer who still profits from lower prices if volume is high enough.

"Pricing is partly psychological. You will want to set your levels according to the perception of your product or service "brand."

Many of our favorite expert articles from the PPS pricing articles archive, cover this subject in depth, such as this excerpt:

"Deciding what prices to charge represents one of the more visible decision variables confronting managers. Product prices send clear messages about customer value and company objectives. Few business decision areas can have a more rapid or dramatic impact on profitability than improved price management. And yet pricing has historically been one of the least emphasized of strategic issues, one that managers are hesitant to critique or discuss."

Read the full article: "Pricing as an Entrepreneurial Behavior"

More excerpts from the pricing archive upcoming - EM