Pricing is one of the most powerful levers for profitability. A small price increase goes straight to your bottom line.
Common Pricing Mistakes
- Competing only on lowest price
- Not accounting for all costs
- Never raising prices
- Same markup on everything
- Ignoring perceived value
Pricing Strategies
Cost-Plus Pricing: Add a markup to your costs. Simple but ignores market dynamics.
Value-Based Pricing: Price based on value to customer. Higher margins possible.
Competitive Pricing: Match or undercut competitors. Works for commodities.
Premium Pricing: Higher prices signal quality. Requires strong branding.
Psychological Pricing
- Charm pricing: TZS 9,999 vs TZS 10,000
- Bundle pricing: Package deals feel like value
- Anchor pricing: Show original price next to sale price
- Tiered pricing: Good, better, best options
When to Raise Prices
- Costs have increased
- Demand exceeds supply
- You've added value
- Competitors have raised prices
- You haven't raised in over a year
How to Raise Prices
- Small increases (5-10%) are less noticed
- Add value when raising price
- Communicate the reason
- Grandfather existing customers if needed
Track Your Margins
Use Tawala to monitor profit margins by product and identify your most and least profitable items.