Business owners need to make sure that their customers know what products and services they’re offering, as well as the prices of these offerings. This is exactly why it’s important for businesses to learn how to create a proper price list that will make sure that customers get all the information they need for them to decide what they should purchase and how much they should purchase.
By knowing how to create a proper price list, businesses will be able to attract more customers as well as keep the ones that they already have. So if you plan on making a price list of your own and if you want to know the different types, then this article should be able to help you out.
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The Importance of Pricing
Before you even start making your price list, you’ll need to learn why pricing is so important. Most marketers focus mainly on sales promotion, product development, market research, and other tasks. However, taking pricing decisions for granted can lead to some serious consequences for any marketing organization. So the reasons why pricing is so important are the following:
- It allows you to set the right amount of money that will get your customers to purchase your product or service. Pricing decisions that are made without any sort of market research, customer analysis, and strategic evaluation will just end with business owners losing money rather than earning a profit. Setting the right amount will require business owners to have considerable knowledge about the market. However, if one does learn to set prices right, then that person can expect to retain all current customers, as well as gain many new ones.
- It can influence first impressions. Often, the customer’s perception of the quality of a product is based off of its price. While the final decision to make a purchase is based on the entire product, sometimes it’s possible that the customer won’t even bother evaluating the product and base the decision on the price alone. Business owners and marketers have to take note that some customers are more likely to dismiss a product when all they know about it is its price. This is one of the reasons why knowing how to price these products becomes all the more important, considering that some customers avoid learning more about the product due to its price.
- It’s a very important part of a sales promotion. A lot of business owners make the mistake of lowering their prices during their sales promotions just to get customers interested. Continually increasing or decreasing the price will allow customers to anticipate when the next price reduction might occur, making them withhold purchasing until the price reduction actually happens.
- A good price can either drive customers away, or bring more to your business. You’ll want to keep reeling people in so that you know your business is going to generate a lot of profit and become a success. Proper pricing ensures that you’ll get customers to see that your business offers the best products and services for the right price. However, do the opposite and you’ll soon find your customers walking out of your store and looking for better options.
The Different Types of Price Lists
Considering that there are different types of price lists that one can utilize, it’s important to know how each of them are used and what information they contain. So here are some examples of the different kinds of price lists that are available:
- Service Price List. This is the kind of document that’s used by just about every business that has a different kind of service to provide. With a service price list, customers are able to decide the kind of service that they would like as well as determine which service is being offered for the best price. Each type of service should have its own description that can provide enough information that the customer can use to make an important decision as to whether or not he or she should choose it. So make sure that the quality of your services match their prices once you prepare your price list.
- Grocery Shopping Price List. This is the kind of list that’s used by just about every person that decides to get out and buy some groceries. With the help of this document, people can make sure that they do not go over their grocery budget since they would be able to keep track of the products that they are going to purchase. Customers who do their grocery shopping online can also benefit greatly from this kind of price list. With the help of grocery shopping price lists, people who make use of online grocery delivery services will have an easier time deciding what groceries they would like to add to their list.
- Photography Price List. A lot of photographers need to know how to make a proper photography price list. The reason for this is because there are a lot of people who might haggle and try to lower the prices of services that should cost much more. So this kind of list allows customers to know the amount that the photographer charges, the different types of options that are available, and any other services that these photographers provide.
- Cleaning Price List. Professional house cleaners need to know how to make this kind of list if they want to make sure that they’re fairly compensated for the kind of work that they provide. With a cleaning price list, customers will get an idea how much house cleaners charge, along with details regarding the services that they offer. The rates on this type of list depend on how the house cleaner rates the price of his or her services. So it can be anything from a per-room rate, a per-hour rate, a flat rate, and so on. So those who wish to make this kind of list have to make sure that they understand what they’re going to charge to ensure that they’re getting the most out of their work.
- Salon Price List. This is the kind of list that customers who frequent salons refer to when they’re considering a new haircut and other such services. With a salon price list, customers will be able to see all the prices for the different kinds of services that a particular salon offers. So everything from haircuts, manicures, hair coloring, skin care, and even make-up are all covered within this price list. It also helps if this type of list has information regarding the available payment options so that customers have a choice whether or not they would like to pay in either credit or cash.
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How to Make a Proper Price List
With a good price list, you and your employees can use it as a reference that both of you can consult and rely on in the event that the prices of certain products need to be checked. You’ll also want to make a price list that your customers are easily able to go through and accept. So if you want to make a price list that can help your business reach success, as well as one that your customers can rely on, follow these steps to help you out:
Setting the prices
- The cost of every one of your goods and services should be set to cover everything from the materials used and all the human costs that factor in the production of these goods. You’ll need to remember that there are some costs that have a fixed amount while there are some that can vary. So the production costs that you’ll have to take note of are payments for the labor, the rent, different utilities used, loans or money owed, maintenance funds, and the costs of the materials needed to produce products.
- Do research that can help you in setting your prices. You can get a general idea on how you should set your price by taking a good look at how your competitors set the prices for their products and/or services. Although this can be time-consuming as well as costly, the information you’ll gain will be very valuable. You can do this by conducting some market research that will tell you how much customers would pay for certain items, and if your competitors are setting their prices too high or too low. You can also ask your customers about what they think regarding the prices of your competitors.
- You’re going to have to know where your business stands within its own field or industry. Market positioning is very important, especially if you have a lot of competitors. There are a lot of things that you have to think about before you decide on the kind of prices that you should set. A good example would be knowing the kind of competition that you have and where they position themselves in the market. You’ll want to make sure that you’re ahead of them so be sure to find out everything about how they operate to how they set their prices. Another thing that you will definitely have to consider is your target audience. Think about the kind of customers you’ll want to cater to by knowing all the pertinent details such as your target demographic, their salary ranges, buying habits, disposable income amounts, and more.
- Avoid overpricing your customers. This is obvious considering that no one would want to buy something that’s priced way more than what it’s worth. If your prices are way too high, then you won’t be seeing any customers who would be willing to purchase whatever your business has to offer. This will result in your business struggling to make a profit or break even. What you’ll need to do is come up with a good pricing strategy that will ensure that you set your prices just right.
- If you shouldn’t overprice your products and services, then you shouldn’t underprice them as well. There are a lot of businesses out there that lower their prices to make sure that customers are more willing to go to their business and buy from them. However, this kind of marketing strategy has its drawbacks. The first would be that customers might think that since you lowered the prices of your products more than your competitors, it could mean that the quality might not be good. Another would be that by lowering your prices, you might end up losing more money than you’re making, especially if you didn’t take the cost of the production and other factors into account, meaning that your business might not survive for very long.
- Once you have determined the cost of all of your goods and you’ve been able to gather information about the market, then you may start to calculate how much profit you should make. The basic formula for this would be: sales – costs = profit. However, you must know that there are also other variables that can affect your profits. You’ll want to do some market research that will tell you your competitor’s profit margins so that you can use it as a reference for when you have to set your own profit goal. It’s also very important that you set a profit margin that still manages to keep your prices reasonable.
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Creating the price list
- Make a list of everything that your business sells. This would mean creating a product list and/or service list that will give you information on everything you need to know. This should be an exhaustive list that you and your employees can use to know exactly just how much you should be charging for every single product and/or service. If you have other branches in other areas that have different products and services, then you’ll need to have those places produce lists so that you can cover everything.
- There are some businesses that offer prices that stay the same no matter who their customer may be. Then there are those businesses with prices based on the kind of service or project that they have to do for the customer, and one where they offer an estimated price list to their clients. You’ll have to decide which of these options is appropriate for your type of business. If you’re going to go with an estimated price list, then you should remember to give the customer the “worst-case scenario” price so that he or she won’t be shocked when receiving the bill.
- You’re going to have to properly format your price list. A majority of price lists are set up in a tabular form, but you can make use of other formats that have a different style or setup. All you have to do is make use of software that allows you to create price lists, such as Microsoft Excel, and select the template that you would like to configure and use. When you’re creating the price list, you should place the product and/or services right beside their respective prices. You will then have to provide other information that must be included in the price list such as shipping costs. In addition, you’ll have to consider things like arranging your list by alphabetical order to make things easier to find, dividing your products into different categories if you have a lot of them, providing the price of each item with or without tax, and much more.
- After you’ve finished developing your price list, you’re going to want to share it with your customers. Customers will appreciate being able to use your price list as a reference as it will help them decide what they want and if your goods are worth the prices that you’ve set for them. You can share your list by placing it on your business’ website and/or you can send it via e-mail. Don’t just focus on sending potential customers your price list. You should also send the list to your current or existing customers. You’ll want to keep them updated if there are any new products that you’re selling or if you’ve made changes to the prices of a couple of products.
- You’ll need to develop a written estimate for the services that you provide. Make sure that you have something like a letter of confirmation that your customers can sign which shows that they understood and have acknowledged the estimated cost. Information that you can include are the overall price along with the component costs, how long the estimate is good for, the terms and conditions for the payment, your contact information, and the schedule for the delivery of the service.
- Make use of a software or service that will help you prepare a price list. As mentioned before, you can make use of software such as Microsoft Excel that will allow you to choose the template that you would like to use. There may even be service providers within your area that you can contact to help you create a price list that’s well suited to your business. However, you’ll have to remember that while this may save up a lot of your time, it’s an additional cost that you’ll have to consider. So you can either do it yourself, or you can hire someone to create one for a price.
Adjusting your prices
- It’s really important that you’re keeping track of your sales figures so that your price list continues to make sense. You’ll want to keep track of the average amount of customers you get and the products that are being sold at an adequate rate. Keep in mind that you’ll need to take advantage of certain things such as the use of psychology to make your customers think that they’re paying less than the actual price.
- A good way to adjust your prices is to test out new offers. You can try things like having sales, providing discount coupons, and any other special offers that your business can provide once in a while. After these offers, you’ll want to check your sales volume by going through the receipts and credit accounts. If you see that these offers have increased your sales, then you may just want to offer it on a regular basis, perhaps even permanently. If you see that the offers have not significantly contributed to your profits, then you can try to improve the offers or you can scrap them and try out other methods.
- Lower your prices, but do so sparingly. As mentioned before, it’s not always a good thing when you decide to cut your prices. Keep in mind that you want your customers to see the value of your products and services. There are other alternatives to lowering your prices that should still ensure that you earn a profit. A good example would be trying to find suppliers who offer you a lower price for your product components. This will reduce the cost of production and it can also increase your potential profit margin.
- If you’re going to raise your prices, then you’ll need to do it over long periods of time and you’ll need to develop a strategic plan. There are multiple reasons as to why you’ll have to increase your prices. These reasons involve inflation, production costs, profit margins, and more. You’ll need to slowly raise the prices of your products. If you do so quickly, then you may just shock your customers and drive them away over to your competition. The best strategy would be to raise your prices gradually and no more than five to ten percent at a time. You’ll also have to take note that customers usually accept price increases during good economic times. So you’ll have to know that the timing is important for when you have to raise your prices.
If you would like to know more information regarding how to create a price list, then we have all of the information you need to help you. All you’ll need to do is search up the price list that you would like to make or know about and you should be ready to go.