Pricing can be one of the big challenges in any business. For many of us who are just starting out with our home-based businesses, this can be one of the areas where we feel the most discomfort—have we set competitive prices? Are they reasonable? Will our prospective customers pay that much? AND, once we do set our prices, we may not remember that we do need to constantly re-evaluate and make sure that our prices stay effective and competitive. A good place to start is to keep an eye on what our competitors’ prices actually are.
So, how can you find out what your competitors’ prices are? You can make regular visits if you are in a market or industry that has physical stores. Looking at catalogs, marketing and sales flyers, and web sites is another way to stay on top of price fluctuations in your industry. You can also ask your customers and prospective customers what they are paying for similar products and services at your competitors’ companies (this might be the least reliable of all your options, but can help you gather some useful information.) Keep in mind that you will want to be as specific in your comparison as possible—compare other businesses doing the same thing, in your region and/or town, serving a similar target market. Of course, you can expand your research to get an idea of what is going on in your industry as a whole (including different regions, different-but-similar products, etc.) but as far as setting reasonable prices is concerned, you’ll want to know what competitors most like you are doing.
It is important to price your competitors fairly regularly. Things can change in a specific market rather rapidly and if you are to remain flexible and competitive, you’ll want to keep your own finger on the pulse of your market.
See Also: Bargain or Premium?
Are You Giving Away Too Much For Free?
Should You Formally Guarantee Your Products or Services?