A price is a number given to a product or service for many entrepreneurs and companies. According to Alan Safahi Orinda, a successful businessman and experienced entrepreneur, costs, market conditions, and assumptions are the primary factors entrepreneurs use to set product prices.
Pricing is essential because it defines the product’s value and worth and motivates potential and existing customers to make informed decisions. It lets your customers know whether they should buy your product or service.
Alan Safahi Orinda argues that pricing is the process entrepreneurs and businesses use to set a product or service price. However, most entrepreneurs find it challenging to maintain a sophisticated pricing strategy. The reason is the lack of knowledge and unfamiliarity with the market conditions.
In fact, Safahi says entrepreneurs rely more on their gut feelings when setting product or service prices. Today’s article will discuss the most common mistakes entrepreneurs make in pricing. Read on!
Not Developing a Customer-Oriented Strategy
Many entrepreneurs think that customers care about the costs of a product or service. However, this is a misconception. Alan Safahi says consumers look for solutions to their problems and pay for products or services in exchange for the results, outcomes, or benefits.
The purpose is to receive the value for their money. Therefore, when you don’t focus on your strategy on your customers and overcharge or undercharge consumers, you leave value on the table or lose the customer. Safahi recommends developing a pricing strategy that aligns with your company’s value and benefits your customers.
Setting the Same Price Across Geographic Locations
According to Safahi Orinda, customers have different needs and preferences, so setting the same price across geographical locations is the most significant mistake entrepreneurs or businesses commit. Prices vary depending on the competitors’ landscape and market dynamics.
When you charge the same price, you sabotage the value by undercharging some customers and overcharging others. Some customers look for discounts while others can pay a higher price for your product. Therefore, analyze the market conditions, and conduct surveys in different locations to know the customers’ preferences.
The purpose is to generate valuable insights and develop a pricing strategy according to the findings of your research and insights. In addition, you must segment your customers based on their preferences to generate higher revenues and maintain a competitive advantage in the market.
Pricing Strategy Does not Align with Company’s Objectives
According to Alan safahi Orinda CA, a successful entrepreneur or business owner does not make decisions at the last minute. In fact, they perform thorough research, use different software applications, and analyze valuable data to make informed decisions.
In addition, successful businesses consider their company’s marketing and corporate objectives when setting prices for their products or services. Strategic or dynamic pricing supports your company, allowing you to achieve your marketing and corporate goals.
You must consider customers’ needs and preferences, analyze competitors’ strategies, analyze your product and how it creates value for consumers, and focus on internal capabilities, including costs and profitability.
Not Changing the Prices Based on the Market
Many entrepreneurs do not change their product prices based on the market conditions because they think about how their customers will react to the decision. However, when you ignore market dynamics, skip customers’ needs, and experience increasing costs, you suffer the consequences of low profitability.
Therefore, Alan Safahi recommends following a proactive and balanced approach to setting product or service prices. Similarly, consider factors like customer expectations and purchasing behavior when setting the price.
Originally Posted: https://alansafahicontracosta.wordpress.com/2022/06/01/what-are-common-mistakes-in-pricing/
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