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#2 Be Valued: how to set the right price and sell

When we set a price for our product or service, we need to understand three things:

  • The COST of what we produce
  • Its WORTH or value to our potential customers
  • That, whatever we think, ultimately it is our CUSTOMERS that decide what they will pay (and this may be more than you think!)

Costs include your time, materials and expertise. Worth is based on scarcity, customer values and status. Understanding, therefore, your ‘ideal customer’ is an important part of deciding your price.

In general, when you make or produce something, it is usual to sell it for twice what it costs you to buy or make it. For example:

  • 50% cost of production – materials, tools, rent, wages
  • 50% profit

When you sell services, for example: consultancy, accounting, translation, copywriting or legal help, your price calculation may be based on a basic hourly rate to cover:

  • % for fixed costs such as office, travel, equipment, software
  • % for your time
  • % for profit

However, market factors will affect the basic price of any product or service. These are: 

  1. Your competitors’ prices

and, more importantly,

  1. What you or your product is worth to your customer: your common values, your experience and how special, unique or rare you are
Marketing Guides - Micro Oiseau - Set the right price and sell

Know your worth

If you are the only plumber in town, your prices are going to be higher than if there were 20 others to choose from. This is because your worth to the residents of the town, over and above the actual cost of what you do, is very high. Your worth would also be high if there were 20 other plumbers but you were the only one who knew how to fix a leaking tap.

If you offer professional or intellectual services, and, for example, you are the only accountant in town your fees will follow a similar pattern to the plumber, based on scarcity and unique skills.

People will pay more for what they value, such as:

Expertise

Experience

Quality

Trustworthy

Unique and exclusive

People also prefer to choose a business with shared personal values, for example: family business, eco-friendly etc.

Your worth to your customer increases with every value you share… It’s like ‘speaking their language’.

It’s important to look at your business from you customers’ point of view. What would build their trust, add value and help you stand out from your competitors? How about:

  • An unique product
  • Personalised delivery
  • Free tasters
  • After-sales support
  • Multi-buy discount
  • Money-back guarantee
  • Qualifications and accreditations
  • Testimonials
  • Brand values
  • Niche expertise and experience