There should be more tips to this complex subject, but here are at least some of what I think you’ll always need to keep in mind.

1. Understand your costs

This is simple. You have to have a margin if you are in commerce. If you have a number of products serviced on one territory and with the same equipment, your overheads will fall equally to all of the products in terms of cost. Here you can play with the pricing – you can cut on the product where you need to compete on prices and add that cost to the price of the more fancy product.

2. Investigate the competition

You don’t have to compete on prices but you will anyway need to know what is happening around. Compare yourself to the similar products and try to find something that will put you forward and give you a chance to step aside from price competition.

3. Understand you customer.

That is who you work for after all. Find as much information as possible and act on it accordingly.

4. Review your costs regularly

Keep ignoring the changes of your suppliers’ prices and overhead costs and you’ll find yourself loosing your margin. Constant review of direct and indirect costs is a must.

5. Don’t cut your prices if you intend to raise them back.

If your intention is to temporarily boost your sales, this is a wring strategy. You will have a hard time raising your prices. Instead, try to offer an additional value that will not affect your costs too much. Communicated properly, this will help boost the sales for some time.

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