Setting your 1 Million Pricing Strategy

Your pricing strategy might determine the fate of your business. A poor pricing strategy has led to numerous business failures. Likewise, if applied efficiently, it creates the necessary support to sustain the operation and growth of your business.

Top 3 Common Pricing Mistakes

1. "cost-plus" pricing: set prices based on costs plus a reasonable margin. This strategy can lead to under-price and, therefore, losing added value, as it does not take into account how the customer perceives and values ​​your products and service. Furthermore, the impact of volume and fixed costs on the unit cost can lead to prices greater than what the market is willing to pay.
2. Lowest pricing: using this strategy to gain market share leaves you in a fragile position against larger competitors with better financial muscle. It can lead to a price war where probably the small business will end business. Furthermore, it destroys value and alters the consumer's perception of it, so then it becomes increasingly difficult to be profitable.
3. Pricing to meet goals and seal deals: These circumstances leave the salespeople at the mercy of customers who will: negotiate to get the lowest price possible or wait for last-minute discounts to place their orders. This behavior destroys perceived value and leaves money on the table.

Setting your $1 Million pricing strategy 

Well, there are different ways to reach that million in sales.

A low-price product or service might be more appealing to the masses, although it requires more effort, investment, time, and infrastructure. As shown in the graph, at a $7 price, you will need to sell 142.827 units to reach one million in sales. In addition, The need to support that number of sales, monitoring of transactions, customer service, infrastructure, and automation, are investments that small businesses do not usually take into account when setting these types of prices. However, if we give another look at the graph, we will notice that the effort required on the number of units to achieve the goal of one million decreases as the price increases. So now ask yourself, which is easier for a small business to achieve, 142.827 or 100?

Please don't misunderstand my point is not that we all sell units at $1 million, but why not? The point is that when whenever we are starting a new business, we must set our prices as high as possible. These prices should not only reflect the added value of our services or products but also the perception of the value of our customers, without exceeding the ceiling price of the market (the highest price the market will bear).

High prices allow our businesses not only to be profitable in a shorter period of time but also to enhance customer knowledge. Since we have fewer customers, it is easier to know them better and offer services and products that fit their needs. Therefore, the company can be able to grow through customer loyalty, which positively affects the company's brand, new purchases, and market opportunities.

Do you feel closer to that million in sales?

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