Setting your prices too low
One of the worst pricing mistakes you can make is to initially set your prices too low, thinking you can easily raise them later. Set a fair and profitable price for your product / service from the very start.
Many small business owners are not fully aware of all the costs involved in producing their product or service. Some entrepreneurs set prices that do not account for all of their expenses – reducing their profit. Avoid this by carefully examining ALL your fixed and variable costs before setting your price.
Following the competition
Basing your pricing structure solely on your competitor’s prices can be dangerous because the costs they use to calculate prices may be very different to your own. They may pay suppliers less or more than you do, or have larger or smaller marketing budgets. It’s always a good idea to examine a few different pricing strategies when coming up with your price.
Waiting too long to raise your prices
If your cost of supplies increases then you will most likely have to increase your prices. Some business owners avoid increases because they are afraid that their customers will react negatively. In many cases it’s a better strategy to make regular, small price increases than to hit customers with one large increase.
Setting random prices
Some of your customers may want to know how your pricing structure is designed. Avoid the mistake of setting random prices and make sure you can justify the prices you charge to your customers.