Pricing Strategies & Your Market

Do You Know What the Market Will Bear?

Pricing strategies and market considerations should not be taken lightly. If you don't know for sure what the market will bear in terms of price, you may find it hard to succeed...

There are a number of issues that go into setting a fair price for your product or service. So many ways to go wrong. One of the most overlooked strategies around pricing has to do with knowing what your target market is going to be willing to pay.

It really doesn't matter if you have the greatest product ever. If the market you're aiming for won't – or can't – pay over a certain cost threshold, then setting a higher price is like spitting into the wind.

So you'll want to be use wise pricing strategies, based solidly on what the market will bear for your type of product or service.

How to Set Pricing for Your Target Market

Remember... Your pricing must make sense to you and to your target market.

And it's all tied together by your vision. For example, if you are planning a high-end café, you can charge $3.25 for a latte. But if you sell coffee at a burger franchise, you'll have a tough time getting those dollars, no matter how fantastic your brew actually is. (So don't bother buying "designer coffee beans" even though you and your friends prefer them.)

A lot of times, "what the market will bear" is based on the well-known law of supply and demand. The real estate market is a great example of this. You'll hear realtors speak of it being either a "sellers' market" or a "buyers' market."

When homes are plentiful and interest rates are low, it tends to be a buyers' market. This means that prices usually drop, because the supply exceeds the demand.

Conversely, when it's a sellers' market, homes are in limited supply, so prices rise.

So, be sure to look at supply and demand when you are deciding on your pricing strategies.

By the way, if you'd like to learn more about how to position your business for your target market, you'll want to check out our Business Buffet "Help Yourself" video learning series:
Business Buffet on Marketing – helping small business help itself to profit, by making business learning fun.

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