It’s great that your customers are getting a bargain, but don’t sell yourself short. Here’s how to match your product or service with the right price point.
If you’ve taken Economics 101, you’ve heard of the supply and demand curve. If your demand is higher than your supply it’s time to increase your price to get it back to a balance. In layman’s terms, if you can’t keep up with the demand, crank up the price to a point where your demand meets supply. Alternatively, you can increase your supply and run a larger business with smaller margins. – Tim Grassin, Candy Banners
If you’re unique within the market and are selling really well, then you probably have room to increase your price. On the other hand, if you’re selling well but have lots of competitors, you’ll want to be careful as your price increase will likely spur a shift in brand loyalty. – Lisa Curtis, Kuli Kuli
This sounds simple, but my recent test has been to ask our sales/customer service groups how many potential clients are telling them they won’t buy our product because it’s too expensive. If their answer is “Nobody tells us that,” then chances are you have some room to move up. – Copley Broer, LandlordStation
If expenses are going up and costs have increased to make the same product, that is usually a sign of rising tide. So, consider competitors’ pricing adjustments, demand and the value you are offering your customers when making changes. – Jessica Baker, Aligned Signs
If you’re generating sales and customers faster than your customer service and product fulfillment can keep up, it’s likely a sign that you’ve priced your product too low. Sure, you’re giving everyone a great deal, but you’re also charging them far less than you could feasibly get away with. –Steven Buchwald, Buchwald & Associates
There are plenty of startups out there that will undervalue their services to begin with so that they can prove the product/service works. This can lead to important early sales, but it does not lead to a profitable company. If you have sales but are not profiting from them, you need to re-assess your costs and prices. In most cases, costs are only going up. – Ben Gamble, Quincus
These answers are provided by members of FounderSociety, an invitation-only organization comprised of ambitious startup founders and business owners.