A Perplexing Question for Business Owners

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.

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About Lynne Strang

I'm a writer who blogs about 40-and-older business owners. I am also the author of "Late-Blooming Entrepreneurs: Eight Principles for Starting a Business After Age 40." Outside of work, I enjoy reading, cooking, vegetable gardening and exercise (especially cycling).
This entry was posted in Business, Career Changes, entrepreneurs, Entrepreneurship, Leadership, Retirement and tagged , , , , , . Bookmark the permalink.

2 Responses to A Perplexing Question for Business Owners

  1. Mike Wilson says:

    This is a very important question. Pricing affects your ability to make a profit. Pricing is very much a challenge in this economy when there is the downward pressure on your price due to everyone being cost conscious and the upward pressure from increasing supply costs.

  2. lbstrang says:

    Given current economic conditions, it may be tempting to change your price strategy — but in the long run, you’re better off if you don’t. It can be confusing for customers, among other things.

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