How to Make Money: Pricing for Value

By Suchi Mumford, owner of Marigold Bazaar

While we have spent several weeks thinking about our businesses, at the end of the day we need these ventures to make some money. Ideally, our businesses will support us but we also hope that they will exceed our expectations and do very well financially. Isn’t that part of why entrepreneurs take that leap? To succeed in something that they own?

Presented by Scott Lewis and Lisa Raiche, the class on pricing delved into the many things to consider before putting a price on our products.

The Value of our product sets the stage for its worth. Is it just the product or are their perceived benefits around the item? There are some basic pricing methods and a variety of pricing strategies. Depending on what you are selling, your approach will vary.

A great deal of what determines our price is the way we present it. Undervalue our product and people may think it’s cheap. Over value it and the competition will gladly swoop in. What you charge will depend on your platform and customer segment.

Personally, I liked the concept of ‘Anchoring’ or an ‘Anchor’ item. For example, a restaurant sells a bottle of wine for $9,000. While the likelihood of selling that is low, compare it with the other items on the menu, like the bottle of wine for $100, and you’ve got movement. Suddenly $100 doesn’t seem like so much. This could work well in retail.

I also really liked the concept of Good, Better and Best price packages. Customers may opt for Best if it’s just a little more than Better and offers a few perks that won’t break your bank. This could work well for a service-based business.

Most importantly, it’s important not to undersell your work or mark down too quickly. Know your value. Know your worth. If you have done your research then you should be able to stand behind your prices with confidence.