Doing Your Detective Work
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?
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.
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).