Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
For a small business, pricing products and services can be a difficult task. Figuring out your costs can be challenging, but you’ll also need to take into consideration profits, competition, value, and brand image, as well as how you want to position yourself in the marketplace.
Pricing communicates quality, says Bryan Ziegler, director of the Small Business Development Center at Indian Hills Community College in Ottumwa, Iowa, which offers free advice to small businesses in the region.
Often, entrepreneurs tell Ziegler that they are starting a new business that will be of better quality and that will have lower prices than the competition. “To me that’s wrong or backwards,” he says. “If you have better quality, one of the ways to communicate quality to customers is through a higher price…. Low price communicates low value.”
People often will purchase services even if the price is higher because they want a high-quality product or better service, Ziegler says. The Iowa Small Business Development Center offers a useful tip sheet titled “How To Price Your Products and Services,” which includes tips for determining costs and assessing your competitive position.
It’s important to research the competition, says Mary Lysaught, a SCORE mentor with an extensive background in marketing. SCORE, a nonprofit association that helps small businesses grow through education and mentorship, offers free or low-cost programs and advice to small businesses.
“I want [entrepreneurs] to focus on the competition,” Lysaught says. “I want them to know their competitors just like they know themselves. Whether it’s privately held or whether it’s publicly held, we give them tools to search as deeply as they possibly can on all aspects of that competitor, not just pricing.”
After researching the competition, it’s important to think about your desired brand image and quality, says Lysaught. “We look at positioning strongly. When you look at positioning versus your competition in an open marketplace, the [brand] image has got to be there. That image sometimes drives the level of pricing that you’re shooting at.” In addition, Lysaught emphasizes the synergy of the “4 Ps”—product, place, pricing, and promotion.
To determine a price for your product or services, you’ll need to first capture your costs. “Be conservatively low on the volume you might sell and a little high on [estimating] overhead, so you have the ability to cover all costs,” Ziegler says.
For services, figure out an hourly rate and how many hours a specific job will take, and then convert that into flat per-project fees, Ziegler advises. “Many people start out thinking they should charge by the hour. I try to get people to think about charging by the job. You actually can create more revenue,” he says.
Some suggestions to help you get the price right:
Determine your expenses. If you are selling a retail product, your expenses include the material and manufacturing costs to produce the product, as well as labor costs.
Calculate your overhead. Overhead expenses include office equipment and furniture, rent and utilities, advertising, telephone expenses, supplies, vehicles, liability insurance, medical insurance, and taxes.
Set a profit margin. You’re entitled to earn a profit over your salary and expenses. While there is no standard profit percentage, a 10 percent to 20 percent profit is common.
Adjust prices as necessary. Your price does not need to be set in stone. Keep track of your expenses, sales, and overhead costs. Once you’ve gone through a trial period and your experience builds, you may be able to reduce your costs and prices. Or you may need to increase them over time because of inflation or industry trends.
A Chicago-based writer and editor, Eve Becker writes about personal finance, health and other topics. She is a former managing editor of Tribune Media Services.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.