As a small business owner, having a great idea for a new product or service is what you live for. But as valuable as you think your business idea is, do you know how much it’s actually worth? When launching any businesses, one of the most important factors you have to consider is your pricing strategy. How much does it cost to manufacture your product or offer your service? If you have a brick and mortar location, how much is rent? How much do you need to cover your overhead, like administrative costs and equipment maintenance? Pricing is an important aspect of business planning, and doing it correctly is essential for giving your business the best shot at success.
As Sara Falugo, owner of Yoga Nest Venice, explains, knowing your business’ worth will end up defining your entire life. Located in the vibrant heart of Los Angeles’ Venice Beach region—Sara offers a variety of classes and workshops, all of which are geared toward achieving one’s physical and mental balance. Teaching such balance proved useful for Sara, as she found herself being pulled between the principles of yoga and being a practical businessperson.
The transition from yogi to businessperson took some getting used to for Sara, but she achieved her own balance when she realized that her price points were fair to both her students and herself. When coming up with your pricing strategy, not only do you need to breakdown your overhead, but also to analyze your competition. What are other businesses similar to your own charging? And should you charge less to remain competitive, or is your business worth more than theirs? When you know your product or service’s worth, then you can really feel confident about charging a price that reflects that value. Ultimately, when you know the true value of your business, your customers will too.