There are three factors which contribute to the value of your small business products or services. These three factors are, quality, price, and service. Normally, pricing is the source of much thinking, research and anguish for the small business owner. Prices are set using a process called “reverse competition.” the prices of competitors products and services are collected and analysed. Then, price is chosen somewhere near the middle. The thinking behind this decision goes like this, ” We don’t want to be the most expensive and we don’t want to be perceived as being cheap, so we’ll set our prices somewhere in the middle. No one will complain that our prices are too high and no one will have the perception that we are at the bottom of the market.”This is flawed thinking because it sends exactly the wrong message to your existing and your prospective customers. The message you are sending when you set your price in this fashion is, “We are middle-of-the-road, and we have price positioned our business in the middle of all the competition.” When you do this you have wasted an opportunity to create a strong point of difference in what you are offering. Given this sort of pricing policy, it is extremely difficult to differentiate yourself from the competition. It is also very difficult to make a reasonable profit.An important point to remember, as a business owner you are often more price conscious than some of your customers and potential customers. There is always nervousness when you increase your prices. This is because nobody likes to be told that they are too expensive. It is sometimes very difficult to know what’s going on in the minds of the customer. The only way to find out is to ask them and hope that they tell you the truth. Sometimes, the truth can only be seen in their behavior as they turn down our offer of goods and services and say that the price is too high. What this tells me is that the value of the products and services have not been well communicated to the customer. When customers complain about the price, it is often a business bluff as they try to persuade you to reduce your prices or give them a discount.All businesses offer some combination of quality, price and service. Nowadays, the minimum levels of quality have become a clear expectation. Quality alone is no longer an effective way of differentiating your product. If you’re trying to sell your service or products based on quality alone, you are likely to have some difficulty. This is because your customer sees you as no different to the competition because everybody’s saying the same thing.There is no future competing on price. This is a certain way of reducing your profit unless you specifically position yourself as a high volume, low cost provider of services or products. The only sensible strategy is to obtain premium prices for your services. No matter what you charge, there is always someone, somewhere, willing to perform the work you do or provide similar products for less money and supply a lower level of service.Customers are not necessarily price conscious, but they are value conscious. They are actually looking for providers of goods and services that make them feel they are getting exceptional value. This means that the person or business providing the products or services must be able to let the customer perceive the full value of what’s on offer.The biggest problem associated with charging premium pricing is in our own minds. Have you heard these sorts of comments. “I will lose all my customers, if I charge higher prices.”As long as you maintain that belief, you’ll find it very difficult, in fact, almost impossible, to make the transition to high end pricing. The solution is to truly believe the value of what you’ve got to offer and be able to articulate this to your potential customers. If you don’t believe the value of what you offer why should your customers believe any different?The third part of the equation is your service. In today’s competitive business environment, service is the component that differentiates the successful companies from the average ones. Most people, will pay a higher premium for excellent service. They want long-term associations with businesses that have a level of service above and beyond what is generally accepted as being normal.Successful businesses have recognised that they are in the relationship building game and their objectives are to do things that strengthen relationships with existing and potential customers.It is this part of the quality, price and service equation that gives the greatest opportunities be different. No other organisation can copy our personal style at creating and strengthening relationships.It is fairly obvious that the businesses that build the relationships will outperform the businesses that don’t. In spite of this, many businesses operate in such a way that they fail to provide any degree of service to their customers. This means that there is a constant “churn” of customers to be replaced at great cost through extensive advertising.At some stage in business, you will encounter resistance to the price that you are charging. It pays to remember, that some people just complain about prices as a matter of course because they feel they are obliged to. As soon as this happens, help the customer to understand the full value of your service and the benefit they will get from it. If your customer can’t or won’t understand the full value of your service-don’t have them as a customer-sack them!