How do you decide what to charge for your products or services?
It’s a very common problem for small businesses, says Bob Dahms, a business counselor with the Bellingham, Washington chapter of SCORE. For those unfamiliar with SCORE, it’s a non-profit, nationwide organization that offers free counseling and low-cost training workshops for small business owners.
In a recent column appearing in The Bellingham Herald, Dahms looks at examples of expense structures and pricing strategies for several business types, ranging from a small, home-based service on up to a major retailer. He says one reason why pricing is such a difficult issue is because different businesses’ expense structures vary greatly. “Sometimes people who have some experience in one business assume that another business is the same,” he writes. “This is a mistake.”
Here’s the full column, which also explains the difference between “markup” and “margin.” It provides some good food for thought — especially for anyone who might be putting together a business plan right now.