Maintaining a healthy margin is essential in order for a company to survive and continue to grow. Appropriate pricing and monitoring costs are key components to establishing and maintaining a strong margin.
Here are some key points on determining how low you should go with pricing your product/service.
Points to remember to maintain healthy margins:
- Have the most up to date information regarding costs – this is the basis for determining your selling price.
- Ensure volume does not decline as this will increase the overall overhead cost per unit and so decrease the margin
- Have an in depth knowledge of the market the products/services are being sold to, to try and maximise the products/services price
- Differentiate your product/service when compared to competitors – this will allow you to ensure that the maximum price can be placed on the product/service as the customer will not be able to find it anywhere else
- With increased advertising now on the world wide web, competitors’ prices are now readily available – monitor this regularly to ensure that you are not losing customers due to excessive margin demands
- Let customers know the high quality of the product/service to ensure that they know the price is justified