I have written before about the challenges new businesses face as they try to get established in the market and build revenues. In one post, I compared new businesses to annoying little gnats flying around in the face of the market.
At the heart of early success for a new business is identifying a compelling value proposition that you can offer to the market.
Your marketing mix, that is the combination of your product positioning, promotional plans, and pricing strategies, all need to reinforce the value proposition you are offering to your customers.
Andrew Gregson explains how pricing reinforces the value proposition in a post at StartupNation.
The most popular pricing strategy for startups and small businesses is to follow the lemmings and charge what everyone else charges or to calculate the costs and target a certain margin. Both are disasters. Following the pack leads to average profits at best. Marking up from costs leaves money on the table.
Even though getting pricing right is tough, it is critical to put in the time to ensure your pricing reinforces your value proposition.