Doing Your Detective Work
There are other ways to find out what the competition is charging besides asking them.
Q: I am planning to go into
a business that has competitors in my town. But they won't give
me their prices because they know I am a potential competitor. How
can I find out what to charge?
Name withheld
A: Depending on your
industry, there may be a trade association or a Web site that
collects and publishes pricing data. For example, if you're a
computer consultant, visit www.realrates.com; if you do editing, desktop
publishing or Web site design, www.brennerbooks.com has a database
of prices for desktop professionals. Often, industry reports are
national or state averages and may not be applicable to your
clientele. But at least they will give you a ballpark idea.
Sometimes businesses post their prices on their Web sites. If
not, talk with people in your community who are using the products
or services and ask what they're accustomed to paying. In the
interest of finding out if they can pay less for equal or better
service, most people will provide such information. The side
benefit is introducing yourself to them as a possible vendor.
Alternatively, you can hire someone to call competitors and do
price comparisons-not unlike the mystery shoppers retailers use to
keep track of competitors' prices.
Content Continues Below
Regardless of how you gather pricing information or the response
you get, the best route to finding out what people will actually
pay you is to experiment by setting up a pricing schedule and
monitoring reactions from prospective customers.
Paul and Sarah Edwards' most recent book is Why
Aren't You Your Own Boss? Leaping Over the Obstacles That Stand
Between You and Your Dream (www.workingfromhome.com).