Is It Time To Rethink Your Prices? Yes, If You Want To Build A Sustainable Business | Competitive Edge | Scoop.it
Startups and small businesses have a habit of setting their prices low in order to attract customers. The problem is, it’s simply unsustainable. These entrepreneurs end up working as hard as they can just to stay afloat. In extreme cases, a business actually loses money with each new sale.

Your prices. Nothing has a bigger impact on your business’ sales, health, and bottom line. Set your prices too high, and your products or services won’t sell. However, according to analyst firm McKinsey, lowball prices are a far more common problem for businesses. In fact, they’ve found that upwards of 80% to 90% of all poorly chosen prices are too low.

It’s easy to understand why this phenomenon happens. Startups and small businesses have a habit of setting their prices low in order to attract customers. A brand new consultant might offer heavy discounts to win business and build a portfolio. Then, she never readjusts her prices back up to market rate. A web startup may keep a feature free for far too long, even though it’s clear that people are willing to pay for it.

These businesses face a similar future: they continue to win new customers, clients are happy, and their business is humming along busier than ever before. The problem is, it’s simply unsustainable. These entrepreneurs end up working as hard as they can just to stay afloat. In extreme cases, a business actually loses money with each new sale.

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