Your small business in large part will depend on creating and shipping value to the customers. There are really strong correlations between your ability to create and ship exceptional value to your customers and the success of your small business.
The important thing when we talk about businesses is their pricing strategy, but also their ability to increase prices in order to ensure better profitability for them. Knowing and using different pricing strategies is not enough to ensure that your products and services will sell in enough quantity that will enable your business to make maximum profit. On the other side, what strategy is the most applicable to your small business will depend on other factors.
Here, I want to mention some of these other things that will have a really big effect in choosing and shaping right pricing strategy for your small business.
1. There is the existence of the correlation between the value that you ship to your customers and the prices that they pay you.
Simply, shipping more value to your customers will mean that you can ask for the bigger price that they will need to pay you for your products and services.
More Value – Greater Price
2. There is an existence of the correlation between your real value and value that’s perceived from your customers about your products and services.
If you really ship great value for your customers, you will ensure that your current and potential customers will have a higher perceived value about your products and services.
More Value – More Customer’s Perceived Value
3. There is an existence of the correlation between the value that your customers perceive to your products and services and price that they are willing to pay you.
The more perceived value of your products or services into the eyes of your customers will mean that they are willing to pay you more for your value.
More Customer’s Perceived Value – Greater Customer’s Willingness to Pay You More
4. There is the existence of the correlation between higher customer’s willingness to pay you more and your possibilities to increase your prices.
If your current and potential customers are willing to pay you more, you can easily increase your prices without fear that you will lose something.
More Customer’s Willingness to Pay You More – More Possibilities to Increase Your Prices
5. There is the existence of the correlation between more possibilities to increase your prices and more profitability for your small business.
If you have more possibilities to increase the prices of your products and services, you will improve the overall profitability of your small business.
More Possibilities to Increase Your Prices – More Profitability for Your Small Business
With all these earlier mentioned correlations we can come to simple but a powerful formula that can bring you great success for your small business:
Create Great Value + Shipping Great Value = More Customer’s Perceived Value = Greater Customer’s Willingness to Pay You More = More Possibilities to Increase Your Prices = More Profitability for Your Small Business
As you can see, your job as an entrepreneur is to continuously work on creating and shipping really great value for your customers, but also to improve all processes in your small business that’s responsible in creation and shipment of that value. If you succeed in this, you will succeed in building a sustainable company.
Question: Are you creating and shipping really great value for your customers? What’re the results that you achieve because of that?
