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Friday, July 25, 2008

Pricing Guidelines

The price you charge your customers or clients will have a direct effect on the success of your business. The basic rules of pricing are very straighforward:

1. All your prices must cover your costs.
2. Regular review of your pricing must be done to assure that they reflect the changes in the market, the demand for your product or services and your competition.
3. Prices must be well established to sell your product or services.
4. The must effective way of lowering your sales price is to lower your costs.

Don't make the mistake of thinking that your prices are set in concrete. Changes in the economic situation and competition plus other factors should be considered when pricings. In general, the higher the price you establish, the lower the customer demand. If customers perceive that a product has a significant value, they will generally be willing to pay more for the product. But changes in the market can affect prices.

Make it your business to understand how to calculate your overhead properly so that when you quote a price to your customer you can be competitive and make the required profit you need to stay in business. - CT

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