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Don’t underestimate the complexity of pricing: It underpins countless strategic decisions your startup will make.
Far too often, startups treat pricing as an afterthought. Upon going to market, founders seldom blame pricing should their company fail to reach expected sales. Rather, they see fault in what they believe to be an inadequate product or service.
When a price does not work, the most common answer is simply to lower it without regard to other factors. However, instead of arbitrarily adjusting price downward, founders should determine how it can better match customer value.
As an entrepreneur, you are required to understand pricing as a strategy, the different methods startups can use and how to select the optimal route. Here’s your guide.
Related: 10 Pricing Strategies That Can Drastically Improve Sales
First, let’s discuss how price is established and why it matters.
Related: The Price Is Right: How to Price Your Product for Long-Term Success
As a founder, you need to see pricing as a means of growth for your startup. Depending on which route you ultimately decide to pursue, pricing can be used to accomplish different objectives.
With this in mind, let’s look at four ways to approach pricing.
Related: 5 Strategies of ‘Psychological Pricing’
Now that we understand the importance of pricing and the various strategies to consider, let’s discuss how to make the right pricing decision.
Ultimately, price is more than a number. It conveys value, signifies the earning potential of your business, and plays a pivotal role in countless other decisions. These tips will help you select the best pricing strategy to unlock your startup’s full growth potential.
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