How to Find the Perfect Price Point for your Product or Service Business in Dubai

Every business struggles with pricing their offering “just right”. Most don’t have any real idea what “right” is, they pick a point between their highest and lowest competitors. Others either actively seek to be the cheapest or the most expensive in their respective markets. So where on the curve should you price yourself?

The short answer is: anywhere you’re making a profit. And by that I mean net profit, after every conceivable cost is removed. Too many businesses price their products or services at “cost + x%”, and don’t take into account the cost of customer acquisition, marketing, cost of outsourced work, and so on.

The longer answer is: put yourself in the position that plays to your strengths, not where you will constantly have to fight to survive. Here, “survive” doesn’t mean “keep making money”. Rather, survival is to remain in the position you have for yourself in the market. If you do that, the money will keep coming in. Lose that position, and you have to find new ways to generate revenue.

An example of the above is a true story: There were two hairdressers across the street for one another. The price for a haircut was about $10. One day, Salon A put up a sign saying “Haircut: $9”. Salon B responded appropriately, with a sign for $8.50. And the price war began. It finally dropped to $6 for a haircut. The other salon couldn’t go to $5.50, as that was cost price (thankfully they knew it!). But they also needed to compete. The issue was, they weren’t playing to their strength, which was delivering a good haircut. So after some thought, they put up another sign: “We fix $6 haircuts”.

While the price was being dropped, a question emerges. If both salons were not making enough money when the price was $10 per haircut, then how was a $6 haircut even doable for them? Logically, they would have to do at least 40% more business to make the same money, without factoring in any other costs. Not playing to strengths can be massively damaging.

In every market, there are the extremes. WalMart succeeds because of its ruthless cost-cutting strategies. It’s position is clear: delivering average grade products at very low prices. The Hotel President in Geneva, on the other hand, boasts one of the most expensive hotel rooms in the world ($81,000/night for the Royal Penthouse Suite, in case you were wondering). WalMarts’ strength is highly leveraged buying power, the Hotel Presidents’ is exclusivity. Both are now in a clear position in their respective markets. It’s the ones who are in the middle ground that have to work hardest to keep their spot.

Murtaza Manji is an award-winning Business Coach and founder of Kaizen Consulting - the first ActionCOACH firm in the Middle East. Murtaza has worked with 350+ CEOs, Directors and Business Owners from 15+ industries to achieve: higher profits, greater productivity from their teams and sustainable growth by creating efficient systems and structure.