What is the best way to price a product or service? What are the things you have to keep in mind? Most business owners who aren’t quite sure what to do will simply use their competitor’s price and the price above or below it. The question to ask yourself then is, how would you know that your pricing strategy is correct?

Let’s look at the factors you need to consider when setting the price. First, you need to determine your price targets. It basically defines what we want to achieve. There are 3 price targets to consider.

1. Income-oriented pricing

It is setting a price that will maximize revenue from the target market. For example, if your daycare offers something that other daycares cannot, such as a particular curriculum, then you may want to consider this goal.

2. Operations-oriented pricing

It seeks to balance supply and demand. It introduces cheaper prices during calm periods (or when demand is low) and increases prices during peak periods (when demand is higher). For example, during the holiday season when parents are not sending their children, you can offer short/elective courses.

3. Target market prices

Use different prices for different target markets. For example, you can offer parents who board more than one child at your daycare center a discount from parents who board only one child at your center.

Next, you need to think about the pricing strategy you intend to adopt. The pricing strategy defines how you are going to achieve your goal. There are 3 different strategies in which you can adopt.

A. Market scheme

Do you think that your day center or its services generate added value? Do you think your customers will be able to afford it? Are you the only or select nursery that offers it? If your answer is yes, then you can consider skimming the market. It is basically about charging the highest possible price. You will need to decide if what you are offering is something the customer values. For example, you’re offering a particular curriculum that other daycares don’t, and you think this value-added curriculum is something your customer will be willing to pay for. Or your center is the only center in the city that closes at 20:00 and it is something that you think your client values ​​and is willing to pay for. Charging a higher price will also mean that you need to communicate this to your potential customer through effective promotional means.

b. market penetration

If there are multiple daycare centers and they all offer basically the same curriculum or services, then you should consider penetration pricing. It basically means keeping the price low in order to gain a larger market share.

against Price Adjustment

The last and most complicated strategy is price adaptation. You are offering different prices to different target markets. For example, parents who place 2 or more children in their daycare are offered a discount. But what happens when one of the siblings reaches school age? It can be difficult to go back to the higher price.

Pricing strategies are something that plagues many business owners. While lower prices may mean higher chances for increased recruiting, low prices may mean you have to cut back on some luxuries, like quality meals or a curriculum, which could hurt your daycare’s image. Therefore, it is important to think very carefully before setting a price because, in most cases, it will be difficult to reverse that decision.