HOW TO PRICE YOUR PRODUCTS AND SERVICES THE RIGHT WAY.
You walk around and find that same products and services are sold or displayed in the same or different environments but different prices. Yes that’s marketing strategy. How does that even concern your personal finances? For a business person, companies or an entrepreneur, it does…..
Which products and services
How do you identify the type of products to offer to your audience?
Identify a problem in that particular environment, what can you do to rectify the situation, how can you do it, what are some of the activities that people in that environment carry out? and what are the resources needed.?
Capital and Budgeting
How much capital is needed to start the business or company? Once you get (you can save for it). Budget budget and budget. Categorize your finances in terms of bringing back your capital, profit expectations and deductions needed for example storage expenses, salaries to employees, repairs etc.
Identify the type of products that you have at hand, to what impact do they have to the environment and for how long can it sustain them e. g perishable foods. Now how much profit have you budgeted for in return and how much of your finances are you willing to sacrifice incase of inconveniences. If you might have taken a loan from Bank, saccos, group or an individual, you have to know how long do you have to pay off your debts. With this, you will be in a position to easily price your products and services.
Now let’s talk about personal finances in pricing.
Pricing need not be only for products or a service. Your finances is your product and you can price it. How?
A friend, neighbour, or a company asks you for a loan or asks a loan from your own company. How are you going to price it? You can probably agree and give out a duration that the debt is to be paid, calculate how much interest will come in return and how reliable is the other party.
Mobile and Banking pricing strategy in Kenya
Let’s look at the airtime strategy. Okoa jahazi where the pricing strategy is to offer some amount and deduct a little sum for profit purposes. Mpesa where withdrawal has transaction fee. You find that however little the money might be there is also some withdrawal charges that is being accounted for. That is their pricing strategy.
Now to banks. Opening account has a chargeable fee. There is always withdrawal charges in atms. Same to you,that when you give out a loan you expect some interest in return. When you run a business you price your products in such a way that you are in a position to get your expected profit even after deducting the expenses.
Profitability and competition of every pricing strategy.
Each pricing strategy you choose has it’s own profitability rates. Look at how different other business offering the same products work, analyse by observation, interview or research on how profitable your products may be, does it satisfy your budget and expectations? is the competition favorable for you and how much risk are you willing to take just to achieve your financial goals!
With this, you won’t go wrong on pricing your products, services and finances the right way.
Feel free to ask any questions concerning the same.