Price

One challenging aspect of running a business is figuring out how much to charge. You’ll need to consider the direct costs of the supplies and equipment you use to make your product or deliver your service. But you also need to figure your indirect costs, or overhead — what you pay for space, employees who don’t create the product or service, professional services you may use, such as a lawyer or accountant, plus what you pay yourself.

Obviously, price is important. But when you market your business, your message doesn’t have to be that you’re the least expensive. In fact, if you’re selling a product, it’s difficult to be successful if you try to compete on price alone. A larger local company or a big chain can almost always charge less. That may make it hard to generate enough revenue with a discounted pricing structure to build your business.

In contrast, perhaps your company can charge a slight premium if you’re offering an added service, like planting flower boxes or fertilizing bare patches in the lawn in addition to mowing lawns. Of course, if extra service is your point of differentiation, you do have to be sure that you can deliver what you’ve promised. If your customers are happy, they may be less concerned about the cost.

Know your customers

The type of customers you are trying to attract will also have an impact on how you talk about price. Some people put more emphasis on exceptional quality than on price. Others feel just the opposite. So you have to know which group you are trying to reach.

Equally important, you’ll need to assess what your competitors are charging. If your prices are too high, you may have a hard time attracting customers. And if they’re too low, you may get the customers but not make enough profit to support your business. The key here is flexibility. You need to be ready to adjust your prices to reflect your costs, to stay competitive and to attract and keep customers.

You do have to keep your eye on whether your competitors are raising or lowering their prices, too, and how they’re positioning those changes in their own marketing. That won’t necessarily change what you’re charging, but if other firms’ prices are going up, it might be easier to position your own increases.