Pricing

I was once advising a small-business client on her pricing models. She had purchased the business from someone else, and wanted to revisit prices that hadn’t been touched in some time.

As part of the adjustment, she wanted to eliminate a product line entirely. It was already a product they didn’t make in-house, but rather farmed out and resold when ordered. She didn’t think it was worth the hassle.

“At that price,” I said.

She asked what I meant. “You don’t think it’s worth the hassle at that price. So raise the price; don’t eliminate the product. If you eliminate the product you never make money from that customer demo. If you just raise the price to a level where you’d be happy to do it, you might make something.”

She said at the price point she’d be happy with, no one would buy. But so what? No one will buy if you don’t offer it at all either, and since you farm this product out it doesn’t cost you anything to offer it; there’s no stock or overhead. Plus just offering it can have some fringe benefits like showing up in Google searches for that item, etc.

The lesson is: it’s better to set a price than to say no. Prices say you’re open for business, and that’s ultimately the message businesses want to send.

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