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Monday, December 18, 2006

Pricing Strategy: Which One Should You Use and Why?

Because you will probably base your pricing strategy at least partially on what other people in your industry are doing, you might need some help navigating through your many options. Usually a pricing strategy is based on charging an hourly rate, a fixed price rate, a per PC or server rate or some of those combined.

Before analyzing the pricing strategy of a competitor, make sure you have clearly defined the competitors you have so you don’t copy the pricing strategy of someone that is not actually competing. There are a lot of semi-competitors that will not have appropriate pricing strategies.

Pricing Strategies: The Test for a True Competitor

Does the company see you as a direct competitor? The answer to this question will clarify. You may think, for example that Dell is a direct competitor, but you may come to realize that Dell would not even consider you to exist. Therefore, copying Dell’s pricing strategy would be absurd as a small business owner.

Pricing Strategies: IT Business Knowledge

As the following questions to determine which competitors’ pricing strategies you can follow:

1. Does the competitor know what he/she is doing with IT?

2. Does the competitor have a good track record for running a business?

3. Does the competitor have a viable and lasting business?

4. Does the company have a scalable business?

Pricing Strategy: The Basic Idea

Before you set a pricing strategy, check on what competitors are doing. Make sure you’re analyzing the pricing strategies of people that are truly in competition and are worth it if you want to put yourself with these companies at the top.

Blogged By: Joshua Feinberg