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Cost, price and value

October 29th, 2012

tigermel

I spent an enjoyable couple of hours at the University of Huddersfield last week, presenting a session on Market Research to students involved in the University’s Enterprise programme. The brief was to give an introduction to why you need to do research and how to do it, in an hour (!). So, it was a bit of whirlwind tour, and I’m grateful to the students for sticking with me and putting a lot of thought and effort into the interactive parts of the workshop.

What I found interesting was the question that came up the most. It revolved around pricing and I think what people were trying to get to was “How do you work out what to charge?”, by way of “How do you find out what people are prepared to pay?”. We didn’t have time to get into the nuts and bolts of how you structure survey questions to uncover what people really think, but I wonder now if we should really have been having a discussion about value rather than price.

Perhaps one of the hardest things when you’re starting up in business is to work out what to charge. If you’ve got experience of your sector, then you have a starting point, but there is always the temptation to charge less because you’re a new business. That’s why I think it’s important to focus on the value you can deliver to your customers and resist the inclination to win business simply by being cheaper. It takes some bravery, but it pays off in the long run.

 

 

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