How Much Is Your Business Worth?

How Much Is Your Business Worth?

A psychologist will at inevitably ask you this self-examining question, “What is your worth?” Your business deserves this same type of introspection. Especially when it comes to the pricing of your products or services.

Whether you sell donuts, widgets, machines or provide hairstyling, financial or consulting services, you should make the time – at least once a year – to self-examine the worth, the value and the ultimate benefit of your offerings.

Before you decide to drop the price of your products or services because of a slow economy or for that matter raise your prices because economic analysts on TV told you to do so, consider the following steps when determining the real value of what you provide/make.

Survey the competition. Try this – ask a friend to pose as a prospective customer and have him/her ask your competitors select questions you would like answered. How long have they been in business? How long does it take them to finish a project? What makes them different? Who will be working on the project? And what are they’re rates?

Be realistic and honest with yourself. If your rates/prices are above your competitor’s prices, how much more are your rates? If your prices are just above your competition, you can make a case that you provide quality and value-added services. Should your prices be astronomically above your competitors, you may wish to consider realigning your prices accordingly – you just might be pricing yourself out of consideration.

Take a deep breath. If your prices are under your competitors, you very well may have been underselling yourself all this time. The clear disadvantage of underpricing your services is that your prospects will come to believe that what you provide may lack quality – even though it may be exactly as your competition. So take a deep breath and raise your prices. If you do not believe in the value of your business, how is your customer supposed to see that value.

Don’t position your business on price. If you obsess over your prices, so will your prospects and customers. Instead of talking about price, talk about the value-proposition you bring to the table: you make the tastiest yogurt; you make the fastest machines; Websites you design are original works of art; your financial services will provide peace-of-mind; you treat your customers like very important people.

Stand by your business. Whichever decision you make, make it a firm decision and stand-by-it. Some customers may want to make you feel guilty or try to reason with you that this is not a good time for you to be raising prices. This is when you need to think about the question at the beginning of this article. How much is your business worth? Stand your ground.

No one wants to lose a client or customer – especially over price. However if your customers really value your business as a strategic partner, and not merely as a vendor, they will look beyond price and value your business relationship above all other considerations. These are the clients that you will be doing business with for a very long time.

Written by Eli Hernandez.

Image: psyberartist, "financial blues", May 23, 2009 via Flickr Creative Commons Attribution.

Posted by Eric Garza on 01/11 at 03:37 PM in Business

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