Everything in your Business Revolves around your Pricing Power

The Russians have a saying: "In every market, there are two kinds of fools; one charges too much, the other too little."

How you price your products and services affects your profits,?your?quality levels,?the?impact?you have, and?your conviction as an entrepreneur in the value you bring.

Increasing prices creates a virtuous cycle where things?get better?with time; decreasing prices has the inverse effect.?

So?what?questions should you be asking when it comes to pricing power?

What are customers willing to pay for?

Many entrepreneurs negotiate based on price because they do not take the time to analyze what customers are willing to pay for.?

Here's a simple framework that I use to think about think about this?and?any entrepreneur can use it as a guide:

1. Services?

Please think about offering auxiliary services like credit lines. People are willing to pay more if they can pay later.

2. Delivery

Can customers pay for your products?easily?(cash, card, mobile money)? Once they pay, how fast will they get the product?

3. Salesmanship?

Are?you building your brand to the point where customers are coming to you having already decided to buy because of how good your marketing is?

4. Quality?

Your product needs to do what you promised and do it beyond the customers' expectations. Continuous research and development efforts will ensure you remain ahead of the pack.

Watch the video below?where?I speak on what customers are willing to pay for>>

How can you increase the perceived value?

The customer is only willing to pay for the value they get.?When a company is trying to figure out prices, only the?perceived value of the customer?matters.

The challenge for any entrepreneur is to find out how to enhance the perceived value and then price the products accordingly.

There are?3?ways to do this:

1.Create Value

This?is where innovation comes into play: Quality compared to competitors, Design aspects, Performance attributes,?the ease?of purchase.

2. Communicate Value

You influence customers' perceptions by branding: unique selling proposition, product descriptions and packaging, and market positioning.

3. Retain Value

The customer is willing to pay for the value they get, but they stay loyal only if the exchange with the seller cultivates a lasting sense of fairness. Customer feedback is a crucial part of retaining value: grievances, appreciation, and changes in purchase frequency.?

Watch the video below?where?I speak on how to enhance perceived value>>

Many entrepreneurs think of revenues from a volume perspective but not on the price side. The logic that lower prices will attract higher sales volumes stops many businesses from building strategies?that would?increase their pricing power.?My years of entrepreneurship have taught me that?having?a great pricing strategy is the foundation?block?of every successful business.

Stay tuned for next week's discussion, where we'll explore the key questions essential for gauging the incumbent competitors in your industry.

Let's continue to build business strategies together!

Feel free to share your thoughts and insights in the comments below.

Your perspective is invaluable to our collective growth.

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