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Pricer’s Points: Solving the Pricing Puzzle | P. Simon Mahler

Setting prices for products and services should be simple–cover costs, make a profit, and appeal to customers. But there are more variables to the pricing formula than many new small business owners may realize.

“When you’re starting out, you may not have a good handle on all the costs you’ll incur,” observes Janet Attard, founder and owner of Businessknowhow.com. “Unless you have previous experiences estimating jobs in the same industry, you may have difficulty making accurate estimates of the time and/or materials needed to complete jobs. You also may not account for non-billable hours–the time you spend marketing and promoting the business.”

Other costs of doing business may also be overlooked–until you have to pay them. These include payroll and self-improvement taxes, fees for accepting cards, health insurance and other benefits, and a variety of overhead expenses.

Yet even after all those costs are accounted for, a seemingly fair price may not gain traction with customers. “Prices are market-driven, not cost-driven,” explains former executive Lou Davenport. “It doesn’t matter what your costs are because the market doesn’t care. What matters is if you can make a profit at price the market will bear.”

A valuable tool for pricing is the SBA Guide, Pricing Your Products, which Attard says, “does an excellent job of discussing basic price setting criteria, and includes some worksheets to help make sure you do account for all your costs.”

Read complete blog here:

Solving the Pricing Puzzle.

P. Simon Mahler

Founder of Pando Logic – Speaker – Motivator – Mentor

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