This story (fully described in Fast Company December ’03 issue), highlights a vital point. In general, we want to price with a goal of maximizing profits, not sales volume. Too often, business owners look at gross revenues (sales), when net profit is what really matters. We could have sales of $250,000 a year, or $1 million, and be losing money. More sales do not necessarily mean more profit. Having sound accounting and analyzing financial reports regularly are essential. It’s important to remember that profit is not a dirty word. A business must earn a profit to stay in business. Whether a particular business’ profit is fair or is excessive is another matter – that could be subject of another article!

Why Women Underprice in Their Businesses

Underpricing is a common problem for women entrepreneurs, which happens for several reasons, one of which may be that we don’t know how to properly set a price that will yield a fair profit. Another reason is we often undervalue ourselves and our product and/or service. Furthermore, many of us have concerns about fair economic access to our products and services.

Pricing basics

The first problem of understanding best way to approach pricing one’s product or service is solved by getting sound business advice, which is readily available in Western North Carolina’s entrepreneurial environment (see sidebar). There are many methods for pricing for service businesses, retail operations and manufacturers. Going into many of them would be too extensive for this article. However, basic parameters are easily set. Costs determine our lowest price and must include overhead expenses, marketing costs, R & D, etc. Demand and competition determine our highest price.

Self-worth

Another reason for underpricing is that we often undervalue ourselves. It’s only in past decade or two that women have been business owners in large numbers that currently exist. Most new business owners, whether male or female, do not have extensive prior experience in running a business. Women have additional challenge of overcoming our internalized devaluation of ourselves, especially in business world. We may feel unqualified or undereducated. Where men might have tendency to understand and properly value (or sometimes overvalue) their product or service, this is usually not case with women.

By now, most entrepreneurs know that they need a website of some sort. Many don't realize that they need a REAL website, one with its own domain name. You need a real website ....

1. ...because it's professional.

Upgrading from a free sub-site at geocities to a full fledged site gives your company a professional appearance. Whenever I go to a website about a product and don't see a domain name, I think to myself, if they can't even afford to have their own site, how can they afford to have a quality product? Your total start-up cost for your website can be below $100, and monthly hosting fee for a professional site can be as low as $25. Some sites, like Host4Profit, even give you chance to have your site hosted for free. See http://www.host4profit.com/cgi-bin/home.cgi?13217 for details.

2. ...because you can get indexed by major search engines.

Where do you go when you're looking for a service, product or information online? Google? Yahoo? A bookmark? To end up in any of these three place yourself, first thing you need to do is get a domain name and build a basic site. The search engines can give you lots of referrals who are looking for you specifically, if you set it up correctly.

3. ...because you can install programs and run scripts that will save you time.

Many small business owners I know don't have their own sites because they don't know how, or think it is too expensive. All these issues can be overcome by outsourcing, or a few minutes of your time. There is software that you can have installed that will build your site for you. And it's free. All you'll have to do then is type in content and you'll be ready to go. The software I have in mind is called PHP-Nuke. There are other content management systems out there that are free but this is my favorite. Go to http://www.phpnuke.org for details.

4. ...because it can reach non-local customers

This point doesn't necessarily help every entrepreneur at first. For example, if you run a mom-and-pop store, being able to reach non-local customers might seem like it's unnecessary to you. But consider this... if you sell or have access to a product that is hard to find outside your area, you could end up taking orders from home-sick college kids, from traveling people, from folks who'd like their groceries ready when they come back from vacation- possibilities are out there. Not always obvious at first, but certainly no reason not to have a website.

5. ...because it can eliminate "nuisance" calls