As we took a look in the previous blogs (read about it here, and here), setting correct pricing is essential not only to ensure you are keeping your profit margins at a necessary rate and marking up the services correctly, but to also ensure you are staying competitive with your market.

The idea of staying competitive in your market can get lost when the focus is too much on the profit. Greed can come into play and lead to an incorrect pricing strategy that inevitably leads an organization to price a service too high. The opposite can happen too and can lead to pricing a service too low.

The goal is to balance what would be profitable, but also competitive with the market. Ensuring there is adequate research and analysis of your market comes first. Understanding what organizations are pricing is essential and, understanding that you will not always be the least nor most expensive will keep you confident that what you are doing works. Understanding your costs, your market and competition are together what would lead to a sustainable, competitive and profitable pricing. 

A factor previously mentioned is the competition within the market and, especially when new to the market, a target price can be deemed high in comparison to your competition. This is because of where your costs are. It is essential to understand that while it is important to understand your correct profit margin and markup value with regard to your company, it is as important to realize that this may need to be sacrificed for the time being when growth is the goal.

When competition has low prices, your pricing strategy will involve a competition-based approach. This involves doing the right market research and again, knowing your own margins. Only you know how much you can afford to drop in the percentage and not lose money overall. Staying competitive comes first in this regard and profits will follow.