Friday, November 07, 2008

Describe your pricing strategy - Investment ready step 4

Your pricing strategy or strategies will say allot about your ability to be competitive within the market. Pricing strategies also have a way of providing insight into your strategic thinking abilities. Many small businesses make the mistake of simply undercutting their competitors, and although this strategy is good in the short term it may backfire when your product cost is higher or not much lower than the selling price. Customers that respond to this strategy will also be the first to leave when new or established competitors respond by also lowering their prices and unless you have the capital backup to fight this type of war, you may be better advised to be competitive in other ways.

Who is your customer and what type of pricing strategy do they respond to. This is the key question you are looking to address.

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