To the right buyer, price is secondary; but to the trader, it’s income. 

Don’t apologize for your prices.  Employees have a right, even a duty, to ask for a pay rise every so often; and sellers of all kinds have the same right to feed their families.

Let’s brush quickly past the theory.  Prices are generally determined by one of four main factors:

Ø      Supply (or demand) :  as with fruit, crayfish, gold. Ø      Cost:  in mature or regulated markets – like milk, transport. Ø      Perceived value: typically works of art, fashion, cosmetics. Ø      Competition: if your market share is small; for commodities like sugar, petrol.

Or we could split the business community into price makers (those with the market influence to set a price) and price takers (committed to a nationally advertised price list – like McDonald’s franchises - or bricked into some other narrow range by product, market or regulatory conditions).  That distinction is mainly useful as a cop – out, because almost all of us are in the middle: can’t do whatever we like, but can do more than we realize.  With rare exceptions we can all, always, be price makers – with care.

Keep in mind that price is just one element of value.  It’s also factual, objective, black-and-white, whereas value is a perception, open to preference, encouragement, and even to whim.  To exaggerate just a little, you can do what you like with the price, as long as you preserve the value in other ways.  That’s one way to look at good negotiation:  you might see it as an exchange that both parties feel is good value.

So how else can you alter the value of your offer?

1. Convenience has value:  the time taken to deliver, the place(s) where you do business, the packaging you use, may be important to some buyers.  Many claim that the Internet is not delivering on the 24/7 convenience it promised.

2. Image is a big factor: for both your premises and your product/service, what about the style, the ambience, the policies and procedures you use - do your buyers feel special?

3. Quality matters, too: can you add quality that sells for more than it costs you?

4. Last and usually the best opportunity – can you deliver better service? How might you provide a better buyer/user/owner experience than your competitors?  Buying experiences are faster to change, but user experiences last longer.  That’s another huge subject: let’s talk details some other time.

In the end, there’s got to be a practical basis for all these relationships.  I mean, how much service or convenience is equivalent to a 10% price increase?  Value doesn’t have a currency, though; you find out the relationship in your market by running controlled trials and keeping records of the results.  The good news is, the knowledge is then your secret.

Try this:

Pick two (or an even number of) offers in your current range.

Plot their sales rate over a suitable period (a week, a month?  Long enough to see a trend in your business), Note any external circumstances that might have affected sales in that period, so that you can allow for them, and still derive a "normal" sales rate for your choices.

Increase the price of half those offers by, say, 5 or 10% and lower the price of the other half by the same percent.  Keep those price changes in the public eye for the same period as previously.

Then put it to use:

Did anything happen to your sales volume (in units sold)?

No?   If it didn’t, perhaps you’ve been under–pricing, because buyers don’t seem to care about the price.

Or did the sales volume change more than the price change? (For instance, a 5% price cut results in a 7% volume increase.)  In that case, lowering your prices could very well increase your profit as the revenue volume goes up.

Now you’ve found out what difference price makes on its own.  Next, try some of the ways (1 to 4 above) to compensate for any damping effects of a price increase.