New entrepreneurs often make the mistake of underpricing their product or service. Lack of confidence, fear, and desperation lead the new business owner to set prices that are lower than those of the established competition.
It’s better to err on the side of charging too much, and put more effort into communicating your value to your customers.
When you set your prices too low, you make a statement to the market that you are competing on price. But there will always be someone who can charge less. Your higher volume competitors are able to leverage the economies of scale, giving them a pricing advantage.
Once customers get used to your lower prices they will perceive you as being a discount solution, and it will be much harder for them to accept a price increase.
If you don’t value your own offering, why should anyone else?
It’s Your Biz: The Complete Guide to Becoming Your Own Boss by Susan Wilson Solovic with Ellen R. Kadin is a well-rounded beginners guide that covers all the basics of starting and running a small business. Practical, down-to-earth advice from someone who has done it more than once.
