Host
Sheila Griffin
Podcast Content
That is when you are probably going to have to cut your prices in order to get buyers. Further complicating matters is that prices will be driven by what you want/need. You may be asking for more than your last comparable sale, and if there is a low inventory and lots of buyers, you are probably going to get it. Your sales price may give some leeway to negotiate in a buyers market, but you will want to stay close enough to the last comparable sale to encourage the buyer to take a look at your house.
If it is time to adjust the asking price, do it thoroughly, and monitor the feedback of your agents and potential buyers that have toured the home to make sure you are getting the highest price. You may initially want to base the price on your most recent comparable sales in a balanced or neutral market, and adjust for the trends of the market. Overall, it is best to identify ahead of time an absolute minimum price that you are willing to accept, so you can adjust the price within this range as needed.
These calculations can help you to make a thoughtful decision on balancing covering your fixed costs while setting a price that is manageable and competitive. To set a sustainable price, be sure to include your labor costs as variable costs for your products. To price your time, determine what you would like to earn per hour in business, and then divide it by the number of products you are capable of producing within that time.
To establish your starting price, add up all of the costs involved in getting your products to market, put a margin above those costs, and you are done. Take this profit goal, add up the costs you are spending to manufacture, market, and sell your product, and you will be able to figure out a per-product price that you would like to charge. Then, divide your revenue target by the amount of units that you plan on selling, and you will get a price that you have to sell one product to reach your revenue and profit goals.
Premium pricing is appropriate for businesses who make a higher-quality product and sell it to higher-income individuals. The key to Premium pricing is developing a high-quality product and one customers would perceive as having a high cost.
A lower priced Best Offer may allow a product to reach a larger number of customers. Second, and on the opposite end of the spectrum, a low-priced Good offering can make a product available to price-sensitive or lulled customers, to whom an existing product line, which would typically become the Good offering, is unaffordable. A low-priced Good offering may limit the need to discount or sell existing products or services--a critical benefit, since frequent sales can undermine longer-term pricing power.
Pricing is the critical strategic decision that you must make for your company, and can be just as much an art as it is a science. Pricing your products is one of the key decisions you will be making, as it affects nearly every facet of your business. How you price your products or services may reflect on the personality of your company, how you see and deal with competitors, and how you value your customers.
Pricing your products typically involves considering certain key factors, including pinpointing your target customers, tracking what competitors are charging, and understanding the link between quality and price. While you might have done some of these legwork when developing your business plan, it is best to get as much perspective and information as you can before you decide which pricing strategy to implement. If you do not have a consistent history of selling your art within a specific price range or in a specific market, or sales are inconsistent, or you are making changes, or you are just plain unsure how much to charge for any reason, a good first step is to utilize techniques similar to what realtors use when pricing homes.
Pricing a home properly may be the single most important factor when selling a house. While pricing your house too high may be a mistake, do not be concerned with pricing your house too low. Sometimes, your home may still be unmarketable, even when you believe that listing price is right for your market.
You do not want to be known as having significantly underpriced the property, as buyers will pick up on it, wait for you, and then decline to buy when it is time for the listing. Of course, there is nothing stopping you from dropping prices later, but it may just become too little, too late. Since most buyers are short-sighted -- only thinking about their current price point -- your job is to show them what they could gain in time, how much they stand to save, and any other added benefits your product or service provides.
Of course, potential buyers would prefer to receive the product free of charge rather than paying for it, but your company is not going to earn any money this way. Setting the price for your products or services should not be an haphazard decision based solely on profitability. Price your products properly, and that can increase the volume of sales, creating a foundation for a thriving business. Like with premium pricing, embracing a cheap pricing model depends on the cost of overheads and your products total cost.