The Australian Small Business Blog

Saturday, February 19, 2011

February Newsletter - How Much Should You Pay For an Orange?

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The price of oranges varies throughout the year. During winter, their natural season, they are plentiful and the price for a fresh juicy orange falls. Out of season, you may see a price increase to pay for the cost of storage or the cost of import from where they are in season.

At any given time, different types oranges will have different prices. Bigger oranges are not always more expensive. A smaller orange which is fresher and juicier may be more expensive than a larger one.

In spite of all this variation, it is usually possible to determine the relative value of different oranges.

But should you pay more for an orange than an apple?
Oranges are usually bigger and juicier than apples. Does that mean they should cost more? You might still pay more for an apple if you preferred their flavour and texture. So how should you compare the price of an apple with an orange?

The obvious way to do this is to visit a farmers market where the prices will be based on supply and demand on the day. Unless there is a glut or scarcity, they are also strongly related to production costs.

Such a market probably doesn’t exist for your business. Your competitors may not be lined up along side you displaying similar wares in front of the buyer, but they may still be easy to compare.

Unless of course you deliberately design your products and services so comparing your offer with your competitors is a bit like comparing apples and oranges.

When the relative cost clues are not easily evident, the buyer will focus on your value. They won’t be looking at the cost per kilo or for your hourly charge.

So if all your competitors are selling oranges, can you make your offer look more like an apple?

Learn about 57 different Pricing Strategies in:

Price: How You Can Charge More Without Losing Sales

All you need to do now is to Empower yourself and take action ...

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.

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Eden Rose said...

Hi Greg,

I just discovered your blog. You offer some very interesting insights.

I think 'How Much Should You Pay For An Orange' is very true. Having recently looked for a particular service provider, we found that price was almost irrelevant - especially as all competitors in this field seemed to charge a similar rate. At the end of the day it came down to service levels, track record and a sense of partnership that helped us make a decision.

Tash said...

I think for buying fruit or other simple items, competitors have to be aware of each other and price competitively.
However, for service based businesses, you're right - value is critical. Value isn't just about how the service will directly help, either, but about how the service is delivered (was the process easy or hard, was the service provider generous with ideas and knowledge or penny pinching, etc)Your own belief in the value you provide is therefore a big influencer on the prices you can charge - and how you make an orange appear to be an apple!


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Dr. Greg Chapman is also the author of
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