One of the most important things you need to consider
when it comes to your business is the pricing. How much should you
charge for a particular product or service? What are the things that you
have to take into consideration? Most business owners who are not very
sure of what to do will simply use their competitorís prices and range
theirs from there. The question to ask then is, how would you know that
their pricing strategy is right?
Letís look at the factors you need to take into consideration when it
comes to pricing your products and services. First, you need to
determine your pricing objectives. It basically defines what we want to
achieve. There are 3 pricing objectives to consider.
It is setting a price that will maximize revenue from the target market.
For example, if your daycare center is offering something which other
daycare centres are not able to offer such as a particular curriculum,
then you can consider this objective.
Target Market Pricing
It uses different prices for different target markets. For example, you
can offer parents who put more than one child at your daycare center a
discount from parents who only place just one child at your center.
Next, you need to think about the pricing strategy you are intending to
adopt. Pricing strategy defines how you are going to achieve your
objective. There are 3 different strategies in which you can adopt.
Do you think that your daycare center or its services generates added
value? Do you think your customers will be able to afford it? Are you
the only or selected daycare center that is offering it? If you answer
is yes, then you can consider market skimming. It basically involves
charging the highest possible price. You will need to decide if whatever
you are offering is something which the customer values. For example,
you are offering a particular curriculum which other daycare centers are
not offering and you think that this value added curriculum is something
which your customer will be willing to pay for. Or your center is the
only center in town that closes at 8pm and it is something which you
think your customer values and is willing to pay for. To charge a higher
price will also mean that you need to communicate that to your potential
customer through effective promotional means.
The last and most complicated strategy is price adaptation. It is
offering different prices to different target market. For example, a
parent who places 2 or more children at your daycare center is offered
discounts. But what happens when one of the siblings becomes of school
going age. It might be difficult to revert back to the higher price.
Pricing strategies is something which plagues many business owners.
Whilst pricing lower might mean higher chances of increasing
recruitment, the low prices might mean that you need to cut back on some
luxuries such as quality meals or curriculum, which could impact the
image of your daycare center Therefore, it is important to think very
carefully before setting a price because in most instances, itíll be
difficult to reverse that decision.