Do you know your “position in the market place"?

Let’s face it, one of the most difficult and yet important, issue is how much to charge for you service.Without meaning to sound rude, I don’t want to know or care if you are £7 per hour or £250 per day labour rate – It is doesn’t really matter. It is more important for each of us to have our own pricing strategy. In fact I am a big fan of fixed price work rather than hourly rate but that is going off topic!!Whilst I am certainly not an expert on this subject and there are many factors that need to be taken into consideration but the biggest one I see is where you foresee your “position in the market place”.Who are your target customers?Can they afford your service?Do they actually want your service!?Is there sufficient number of customers in the area?I don’t think you need to worry about competition from other service providers at this stage too much other than to be mindful of their existence.Before setting the price there are a number of other key considerations – Are you aiming for short or long term profit. Personally I would always aim for short term profit as cash-flow is as always ever so important rather than higher revenues with a very slim profit margin (This can come later when you decide to increase your market share and achieve lowering of costs through economy of scale).If you want to signal a message to your potential customers that you stand for high quality and can actually deliver on this then I would suggest that your price should be set higher than most of your competition. The flip side is that whilst a smaller percentage of customers will be more than happy to pay a premium there is always the customers perceive perception as to what is a "fair price”.I am also a great believer that you get what you pay for. Whilst cheap is okay, I would be more worried if I was being sold a Rolls Royce for the price of a mini as I would have to question what short cuts or shoddy workmanship would be undertaken!So once the “price” for your target customers has been determined the real challenge is to market yourself and actually get the right kind of customers.Just one small comment I would like to add with regards to some websites and other marketing material (and this is from feed back from actual clients). If your website suggests that you handle high city fliers with buckets of spare cash and many acres of land you are actually turning off 99% of the people who may actually need your services. Better to be honest and truthful about your average customer you aim to attract and besides you can always add that you also welcome the more affluent client for a truly bespoke service.So it’s all about your position in the market place – get it right and with the right pricing structure to support your service you will be half way there.And yes you will always get a potential client saying I can’t afford your prices, which is no big deal but if you encounter this a lot then it may suggest that you are targeting the wrong market and not necessarily that you have your pricing strategy wrong!

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Do you know your “position in the market place"?

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