BusinessWeek Online recently ran an article on how small business owners can effectively set accurate prices for their product and services. It involves an interview with consultant Andy Birol who outlines what considerations a small business owners should take into account when setting their prices.
He states one of the biggest mistakes that small business owners make when setting their prices is to compare themselves to similar companies and price against them as opposed to pricing against the value that they are bringing to their own customers. Small business owners should not feel as if they have to undercut the competition. Birol believes this is a potential strategy that can lead to disaster.