6 Lessons on Starting Up From Norm Brodsky

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Charge on the High End

The classic mistake is to set pricing based on what you feel you need to earn rather than on how the market values your service, says Brodsky. "Competition generally determines the price you can charge. So the first step should always be to find out what competitors are charging." Call up other providers, posing as a customer, and get estimates. Contact state and national trade associations for information. And always gauge your customers' reactions to the price you give them. If they're response is along the lines of That's all?!, tell them you charge extra for X, Y, and Z. "Whatever approach you take," says Brodsky, "the rule is the same: You don't set the price; the market does." (For more, read "Solving the Pricing Riddle," September 2010.)