Pricing in business – an example of how we help

  • Pricing in business
  • Do your research
  • Price relative to the customers you want

Michael Godsmark,

December 7, 2017

Whilst speaking to a customer about their year-end accounts, they presented a pricing in business issue they wanted our help with.


Our customer is embarking on a side-line from their main business. They’ve been testing the water and improving their product before they go to the marketplace with it. Initially, their pricing has been extremely cheap – less than half the price of their competitors.

When we asked them what their pricing strategy was, we knew straight away they were too cheap. However, we had pitched ourselves against their family who said the price he was setting was already too expensive.

A bit of research

Whilst we were still on the phone we looked at a few competitor prices. Not only were the competitor prices 50% more that what our customer wanted to charge, the competition are adding VAT to the end bill. This meant they were charging 80% more for the same product (our customer was incorporating VAT into his price). We could also tell our customers the other suppliers have decent customer bases.

When I told my customer what the price difference was and who we were comparing them to, he said that his product was better than theirs, and has since increased his prices. Only by 25%, but that’s a start. When they feel braver and refine the product more, they will look to increase their price further.

Pricing in business – What can we learn from this?

  1. Don’t be a busy fool. Our customer would have won a lot of work at his prices. But would quickly have become very busy with not enough margin to maintain quality of service or increase staff overhead to take workload from him.
  2. Family mean well, but research your prices independently before you decide the price of your product.
  3. Pitch your price relative to the type of customer you want. Our customer has already told us about his customers were complaining that he’s gone up from his tester prices. These are not the customers you want. You want customers who are happy to pay your price because they like your service and product.
  4. Our customer is going to earn 50% more money than he originally though they were going to for the same work. And have customers who are more than happy to pay it.
  5. Make sure you have an accountant or business advisor who can help you with things like this! Contact us here if you want any assistance.
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About The Author

Michael is an enthusiastic and cheerful individual who, when not hard at work, enjoys mountain biking, cooking curry and travelling to new places.


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