Price Setting for the Home Business Owners

Some home-based, one-person businesses feel they can't sell their services based on a price advantage. In fact, they are often quite a bit more expensive than their main competitors who are much larger. This can present a problem when you're trying to get new customers to sign on!

So, instead you sell value. Sounds glib, but it's not that difficult if you plan carefully.

Begin by identifying the problem you're solving for your client. The problem might not be obvious, and your prospective clients might not even have identified it as a problem.

For instance, maybe they have a group of their own customers whom they aren't able to service well. So subcontracting to your company will alleviate their guilt and at the same time provide some needed public relations. Play to this, and price concerns may well dissolve...or at least fade into the background.

To accomplish this, you must understand your customer's business. And this may take some research - even a few meetings. Learn all you can about the company's direction, its organizational structure, and its key players. Be sure you understand who really makes the buying decisions (and that might not be the person who is called the buyer!).

Pricing In Relation to the Competition

Pricing is an area of contention for many home business owners. Many people, once they have set a fair price, feel defensive about justifying their fees to prospective clients. Well, an ounce of prevention is worth a pound of cure, as the old saying goes. Planning your marketing presentations to prevent price objections will alleviate the need to overcome complaints about your prices later.

One way of accomplishing this is to position your product or service so it seems as different as possible from those of your competition. By making your prospects aware of these differences, you will probably prevent them from making direct price comparisons.

So identify what makes your product or service different from the competition, and point it out as often as possible. Differences may be directly related to the nature of the product or service, or may relate to add-ons like packaging, extended service or free delivery.

Or what sets you apart from the competition may be your professionalism and ethics, or your willingness to provide that bit of extra information or service that enables the customer to benefit more from your product or service.

There are other ways to increase the perceived value of your product or service. These include:

  • Avoid using negative phrases that sound like apologies for higher prices. Be enthusiastic - it can be catching.
  • Break down the cost over the life of the product, including the amount of money the product will generate or save for your customer.
  • Use testimonials from customers who paid your higher price and are glad they did.
  • Stressing the benefits of the product or service will make the customer accept the cost more readily. Include non-monetary or psychological benefits such as added prestige, improved image, etc.