My last post touched on a few sources to check out when you are researching for your new business. As I said, it’s imperative to starting a business. You want to know as much as you can when you are putting together your business plan. No amount of research will prepare you for every single thing you come across once you actually start, but it will give you a level of confidence to get over any hurdle you come across. Not to mention prepare you to not only sell your product and possibly secure the business loan you may need to get started.
Pricing – What is too high or too low?
Before I started my business, I spent a lot of time researching similar products and what the price point was for that product. Many of the books I suggested in the last post will provide you with a formula and walk you through pricing a product, whether it’s wholesale or retail. I sell both wholesale and retail, so I actually have two price points. Without using these formulas and following their advice, you run the risk of under pricing or over pricing your product. Both of which can be fatal. (Click here for a document provided by the SBA on pricing a product.)
Under pricing can eat away at your profits and you may not even realize it. Over pricing can be detrimental to sales, resulting in no profit at all. You must consider several factors when determining your price; such as cost of raw materials, cost of your time or employees, packaging, etc. These formulas walk you through that process.
I have changed my pricing many times over the course of 6 years. I initially priced my product at a low price. I thought I was being competitive by undercutting my competitor, but soon realized I was actually giving the perception that my product wasn’t as superior as theirs. My sales were okay and I even had retailers balk at the “high” price. Oddly enough, when I raised my price by $8 to match my competitor’s price, I not only got more sales, but the balking stopped. I can only assume that retailers believed my products were worth that price instead of being a cheaper version of my competitors.
Don’t panic. If you get it wrong the first time, you can always adjust the pricing. It’s not going to kill your business, unless you just don’t pay attention to your bottom line. And remember, it’s always easier to go down in price, than to go up. Aside from the typical price increase due to manufacturing costs, those are expected, within reason. Luckily for me, I raised my prices early in the game before I was really out in the market place.
The Competition
Competition also plays a part in pricing among other things. You want to stay competitive in your market if you want to sell anything. But that doesn’t mean you have to price it the same as your competitors. There are other factors to consider.
Are your products of a better quality? Is your customer service superior? Is your turnaround time faster? All of these factors can warrant a higher sale price. But be realistic, don’t convince yourself your items are of better quality unless you know for a fact they are. I have purchased many competitors products to personally inspect their products on quality. Don’t go by the picture on the internet, because as we all know photos can be deceiving and colors can be altered. Also, you don’t want to miss-represent your product to your customer; they WILL know in the end and won’t hesitate to tell you so.
Keeping Up
Checking out the competition is important. It’s important to know how their products are made, what they promise their customers and what their rankings are in the search engines. I regularly do searches for my keywords on Google and yahoo to see where I pop up in that list. Are your competitors buying keywords on these search engines? Are they advertising? Are customers finding their websites before they find yours? Have they introduced a new line? All of this has an affect on your sales. Although you don’t want to be consumed or obsessed by your competitors, you do want to periodically check them out. Believe me, they are checking you out! Here's a great blog on Competition and how it's good for your business!
Don’t let all of this scare you, it’s not as complicated as it all seems. I promise! A little research will give you the confidence you need in setting your prices. It will let you know what you are up against with the competition and help you put together a game plan for launching your product.
Monday, February 4, 2008
Saturday, February 2, 2008
So You Want To Start Your Own Business?
So you want to start a business? You want to be the big boss, the big kahuna, king of the kingdom (eh hem, or Queen). Whether it be product oriented or service oriented, the process of getting started is all pretty much the same.
Research Your Little Heart Out!
I can’t tell you how important this is. It doesn’t matter how much you know about your product or service, (and for this post we will assume it’s a product) there will always be something you don’t know. There are things you don’t even know you don’t know.
Even if you know your product forwards and backwards, chances are you don’t know everything there is to know about taking it to market. You might not know very much about your competition and trust me, this is one of the most important things to keep on top of. You could probably learn a thing or two or three about starting a website, a blog or selling wholesale. The internet has so much on all these topics and from so many different sources; you are bound to find the answers to your questions and information you didn’t even know you needed to know.
Researching all of these things can be time consuming and over whelming at times. There’s so much to learn. Now, don’t get so over whelmed by the research that it paralyzes and stalls you. Once you have the basics down and feel comfortable hanging the "Open" sign out, much of the research can be done simultaneously. It’s a never ending process. There will always be something new you need to learn. Technology alone can keep the research "to-do" list jam packed.
The internet has also been my portal to many on-line support groups. It has been the matchmaker to many a friendships. It has also been my window to the outside world. Working alone, from home, can be…..well, lonely!
My Two Best Study Buddies
I have two favorite, can’t live without, research buddies. I just gave you a clue to my first study buddy. The Internet! What an endless source of information. Always up to date and just a click away. This is where I research pricing, trends and competition. But be warned, this can be such a time sucker! Oh how you can get lost in the links. You have to stay on task and learn to bookmark interesting things you come across that aren’t relevant to your current quest. I have lost days to browsing websites only to find that most of what I have read, although business related, was not on topic. My desktop is packed full of organized folders, full of links for future reading.
My second, can’t live without buddy, is Amazon.com. I’m a former Barnes and Noble junkie and I have probably spent thousands of dollars on books. I even considered getting a part time job once, since I spent so much time in that cozy little store. That is until I discovered Amazon.com. I love this site. Well, the book portion, I haven’t ventured beyond the books yet.
I love how they make it so easy to search for a book. I love how when you find one, they give you a peek inside the pages, the table of contents and even excerpts from a chapter. They tell you what the book is about, just like reading the inside cover. AND they give you actual customer reviews. But my favorite part is the suggested list of books you get that are similar and that other customers purchased along with that book. Many times I end up buying a book that I had no intention of purchasing otherwise.
Oh YA! Did I mention that they also sell used copies, for a fraction of the cost? I can spend as much for 3 books as I would one full priced item at Barnes and Noble. I never pay full price for a book anymore, unless it’s a new release. In fact, tonight, I bought 3 practically brand new books for under $30, shipping included. I have also never received one book that was in less than perfect shape. I have never been disappointed with a purchase. I’m a fan for life!
Soooo…..What Books are on My Library Card?
Here’s a list of books (in no particular order) that has helped me in one way or another since I first began researching my business. Don’t be fooled by the titles. No matter what product you are taking to market, most of the information you will find in these books is adaptable to just about anything. As you can probably guess, I’m addicted to researching and learning more about how to run my business. I often times have had two or three of these on my nightstand at one time. Hint…..if you follow the links, they will lead you copies from my BFF Amazon.com. Be sure to click the “Used & New” link for great deals. Enjoy the reading!!
Research Your Little Heart Out!
I can’t tell you how important this is. It doesn’t matter how much you know about your product or service, (and for this post we will assume it’s a product) there will always be something you don’t know. There are things you don’t even know you don’t know.
Even if you know your product forwards and backwards, chances are you don’t know everything there is to know about taking it to market. You might not know very much about your competition and trust me, this is one of the most important things to keep on top of. You could probably learn a thing or two or three about starting a website, a blog or selling wholesale. The internet has so much on all these topics and from so many different sources; you are bound to find the answers to your questions and information you didn’t even know you needed to know.
Researching all of these things can be time consuming and over whelming at times. There’s so much to learn. Now, don’t get so over whelmed by the research that it paralyzes and stalls you. Once you have the basics down and feel comfortable hanging the "Open" sign out, much of the research can be done simultaneously. It’s a never ending process. There will always be something new you need to learn. Technology alone can keep the research "to-do" list jam packed.
The internet has also been my portal to many on-line support groups. It has been the matchmaker to many a friendships. It has also been my window to the outside world. Working alone, from home, can be…..well, lonely!
My Two Best Study Buddies
I have two favorite, can’t live without, research buddies. I just gave you a clue to my first study buddy. The Internet! What an endless source of information. Always up to date and just a click away. This is where I research pricing, trends and competition. But be warned, this can be such a time sucker! Oh how you can get lost in the links. You have to stay on task and learn to bookmark interesting things you come across that aren’t relevant to your current quest. I have lost days to browsing websites only to find that most of what I have read, although business related, was not on topic. My desktop is packed full of organized folders, full of links for future reading.
My second, can’t live without buddy, is Amazon.com. I’m a former Barnes and Noble junkie and I have probably spent thousands of dollars on books. I even considered getting a part time job once, since I spent so much time in that cozy little store. That is until I discovered Amazon.com. I love this site. Well, the book portion, I haven’t ventured beyond the books yet.
I love how they make it so easy to search for a book. I love how when you find one, they give you a peek inside the pages, the table of contents and even excerpts from a chapter. They tell you what the book is about, just like reading the inside cover. AND they give you actual customer reviews. But my favorite part is the suggested list of books you get that are similar and that other customers purchased along with that book. Many times I end up buying a book that I had no intention of purchasing otherwise.
Oh YA! Did I mention that they also sell used copies, for a fraction of the cost? I can spend as much for 3 books as I would one full priced item at Barnes and Noble. I never pay full price for a book anymore, unless it’s a new release. In fact, tonight, I bought 3 practically brand new books for under $30, shipping included. I have also never received one book that was in less than perfect shape. I have never been disappointed with a purchase. I’m a fan for life!
Soooo…..What Books are on My Library Card?
Here’s a list of books (in no particular order) that has helped me in one way or another since I first began researching my business. Don’t be fooled by the titles. No matter what product you are taking to market, most of the information you will find in these books is adaptable to just about anything. As you can probably guess, I’m addicted to researching and learning more about how to run my business. I often times have had two or three of these on my nightstand at one time. Hint…..if you follow the links, they will lead you copies from my BFF Amazon.com. Be sure to click the “Used & New” link for great deals. Enjoy the reading!!
Guirilla Marketing Series
Crafting For Dollars
The Business of Bliss
How to Turn Your Passion into Profits
Dream Big
How to Run Your Business Like a Girl
Girls Guide to Building a Million Dollar Business
The E-Myth Revisited
E-Myth Contractors
Survival is Not Enough
The Dip
Clueless
The Complete Idiots Guide to Starting Your Own Online Business
Blogging for Dummies
Ladies who Launch
Eat Cake (fiction – but a very inspirational read)
I just bought these tonight and can’t wait to find them in my mailbox!!
No B.S. Wealth Attraction for Entrepreneurs
No B.S Time Management for Entrepreneurs
Power and Soul
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