The subject of pricing reared its ugly head again recently when my partner and I had a heated discussion about what price to quote for two projects we'd been invited to tender for. I felt my partner was going in too low and that we were undervaluing both the quality of the work and our time. He, however, felt that the quotes I wanted to give were too high and that we would lose out on the jobs. As ever in business we compromised somewhere in the middle, but it did raise the thorny issue of where we should set our pricing.
What you decide to charge for your product or service is one of the most important decisions you will make as a business person. Both too high and too low will cause you potential problems with your sales and cashflow and will affect the growth of your business. This isn't purely about new businesses as it's also important for established businesses to carry out regular reviews of their pricing to help improve their profitability. Plus, of course, new and growing businesses must always be aware of what their competitors are doing in terms of pricing.
Perhaps you are in the situation where you know you want to start your own business, but have the really tough dilemna of choosing what type of business to open. People using a particular skill or expertise often take it for granted that they will start a business in that area, but the same isn't true for all of us.
Most businesses will have noticed their overheads increasing rapidly in recent years, but the truth is that overheads have actually risen by nearly a quarter in just five years with transport, energy bills and insurance the biggest offenders. Not surprisingly, this is having quite an effect on many businesses who simply can't sustain this kind of growth in costs and, in fact, see it as the biggest threat to their business. It's not surprising, considering this news, that so many businesses feel this country has become simply too expensive when it comes to doing business.