Friday, June 1, 2012

The Temptation of Under Pricing Your Product or Service

This post from Norm Brodsky is wise, wise, wise. I have consistently seen this reality in action in the various faith venture projects that Belay Enterprises has been involved with over the years. 

There is a great temptation to overestimate the volume of sales and under price the value of the product you are offering. 

Resist the urge to see your product or service as a commodity and instead promote its true value. When you become a commodity, you lose. It's very hard to make profits from volume at the start or in the long run.

There's a funny thing about entrepreneurs: They're often way too optimistic about sales and way too pessimistic about prices.
I've witnessed this phenomenon many times over the years, most recently in two women with whom I've been working. A few months ago, Carey Balogh and Julia Dawson opened a play space for kids near my home in Brooklyn, New York. It's called Frolic, and it offers classes, birthday parties, a boutique, a coffee lounge, and a play area, all with a rock 'n' roll theme. It's a great concept, and it will be very successful, I'm sure. But first, Carey and Julia need to learn that business decisions must be guided by numbers, not emotions.  The Single Most Important Rule of Business, Norm Brodsky.

Read the whole article here.

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