Pricing for Profit - Top Tips

Define your products & services – be clear about what you offer and define them in writing.

Look at the big picture – pricing is not a standalone issue as it is one of the “P’s” in the Marketing Mix and a key element of your own Business Model (one of the 5 Pillars of Good Business Finance).

Work out what your products and services cost to deliver – calculate your direct costs (booking fees; cost of supplies; etc.) and your indirect costs (marketing; rent; insurance; staff costs; bank fees; etc.) so you know what you’re spending.

Know your gross profit from your net profit – understand how these are calculated so you can see how to maximise both and reward you for your experience, expertise, time and risks.

Decide on your pricing strategy, here are 3 common options:

• Cost plus – work out your costs and add on your desired profit
• Competitor based – benchmark your prices against your competitors
• Consumer value – look at it from the customer’s perspective and what they might pay

Consider a mix of strategies – combine different strategies to arrive at your prices.

Develop your own pricing template – a simple spreadsheet system could help you to ensure you’re covering your costs and help you to sensitise your variables and maximise your profit.

Don’t forget your time – track the time you spend preparing for and winding up from a tour/event etc. and include travel and other time directly attributable to your products or services.

Develop a clear written pricing policy – documenting this forces you to be clear about what exactly you want from your pricing and allows you to share it with your team if appropriate.

Seek outside challenge on your pricing – find someone independent who will give you honest and professional feedback and advice on your pricing.

Know your breakeven point – this is particularly important if you are launching a new business or a new product or service (and remember timing of this is important too).

Track and manage your pricing and your profit – use a quality bookkeeping system so you can accurately measure your business performance.

Develop a plan and a forecast - use your prices as a basis for structured business planning so you can stabilise or grow your business over time.

Be clear about your USP – develop your own Unique Selling Proposition and communicate that to your customers and markets before you communicate your pricing.

Don’t undercharge – it’s easier to lower your prices if you need to, than it is to increase them.

Use discounts sparingly – premium products or services rarely need to offer discounts.

Consider working collaboratively with others – you can often expand your packages, market and profit if you work with other providers.

And last but not least……don’t undervalue yourself or your team - if you don’t believe in yourself, why would your customers?