photo by D3 San Francisco

As a small business owner, how often do you assess and adjust the price points of your product or service? Do you wait until someone complains about the competition’s lower prices?  Or have you just maintained the same prices you set when you first started your small business?

If you’re a Starbuck’s drinker, you may have noticed a recent change in price of most of their menu items.  Jay H. Heyman provides some interesting analysis of the adjustment, pointing out that basic coffee shop offerings, like a cup of drip coffee, will likely drop in price (and it has at my local shop), while premium items, like the various versions of the Frappuccino, will see a price increase.

Why? Because consumers expect premium products from Starbuck’s and will (hopefully) be willing to pay the extra few cents. Instant growth of profit margin.

So in light of your small business’ product and service offering, does your pricing strategy fit your customers’ holistic perception of your brand? Are you undercharging because you’re afraid of alienating your customers or clients?  Are there other strategic adjustments you can make to increase your profit margin without alienating customers?

Take some time to think strategically about your pricing strategy and your efforts will literally pay off.