Pricing can be one of the most confusing, yet most important aspects of any business.  When you provide services or products – they come at a price for you to create them.  Whether it is time, energy, or money, there are costs that you must incur with anything you sell.  I have heard from people on numerous occasions that they are desperate to make money because they either priced their product too low or gave too much away.  Many times in our eagerness to sell we will run huge discounts, specials, giveaways, or offer lucrative affiliate commissions to the detriment of our own profit.  When offering services or products for sale you must be constantly aware of the price erosion pitfall that can sink your profits.

Tips to maintain integrity in your pricing:

• Determine your actual costs

  Including support, time, hard costs, and factor in unexpected roadblocks.  You absolutely must determine how much it costs you to deliver a product and the profit you stand to make from each item sold.

• Use discounts sparingly

  We often think of discounting as the first and easiest way to increase sales.  It will many times increase your revenue, but what impact will it have on your profit?  You will now need to sell “x” more products to compensate for the smaller profit you are making.  Additionally, if you run discounts or promotions too often you will cannibalize yourself and your customers will always be waiting for or looking for the next promotion instead of buying it at your regular price.

• Don’t give away too much

  We have all heard the saying “Don’t give away the farm” and this is particularly applicable when deciding commission rates for affiliates.  Affiliates can be your bread and butter and you want to make sure that your product is priced high enough to take into accommodate the commission you are wanting to pay affiliates while still making money for yourself.

Maintaining integrity in your prices is integral

In order to make money (offline or online) you must maintain your price integrity, otherwise you will face a long and hard journey trying to make money and will constantly be fighting an uphill battle.  The preparation and planning will be well worth it when it comes to selling your products or services.