"This product is way out of my budget" a customer recently emailed me. I sighed and reminded myself that not everyone is now always right customer for my store.
Here's why you shouldn't take all customer feedback into account when you're setting your pricing.
1. You'll sacrifice quality.
When you first start your business, it's important to pick a pricing strategy that suits your brand vision. Do you want to sell a lot of product at a low price? Or do you want to sell higher priced products at a lower volume? Both of these models can be lucrative business models. In my store, I chose to price products higher than industry average so I could have higher quality design and more durable products. If I were to decrease my prices, it wouldn't allow me to offer the same kind of quality to my customers.
While yes, you should listen to customer feedback as a benchmark, not every piece of feedback you receive will be from the right type of customer. Look at other products in the industry to get a sense if your products are within a similar range for similar quality.
2. Breaking even will be a challenge.
When I first started selling online, tax season was a surprise. After doing my taxes I realized I was barely breaking even. I needed to increase my prices and fast. Though I had some complaints, it was in the best interest of my business to increase the prices on my product offering. When you are establishing pricing, take a good hard, look at your finances to do a break even analysis. During my breakeven I forgot to take taxes and other operating expenses into account which caused me to underprice. When thinking about pricing, take into account all expenses including employee costs, product materials, marketing materials and even your phone bill.
3. You won't be able to grow the business.
I'd love to offer all my products for free but it wouldn't allow me to grow the business to exist in the future. If I lower my store prices, it will ultimately impact my cashflow in a negative way. While trying to please everyone, this can make your business crash and burn. Sticking to your prices can help you generate a positve profit that allows you to expand your business operations. When I rasied my prices, I was shocked to see that sales actually increased. Because my prices were higher, I was able put more money into customer service and press outreach which in turn encouraged sales.
The next time someone tells you you're charging too much, take a step back to look at your finances, the market and your cost of doing business. You'll quickly learn whether or not they have a point.