Seven Biggest Mistakes in Setting Prices

Using the same margin for all products. There's no rule, law or commandment that says all products need the same margin. In reality, slower-moving items need higher profit margins. You can afford a smaller margin based on high sales volume. Even then, you should find ways to add value and increase those margins. Because in the end, even those incremental increases over time will make a big difference to your bottom line.

Not understanding the difference between margin and markup. Margin is always based on sales price. Markup is always based on cost. I once had a client who didn't understand the difference, and offered a line of products with a 100% markup ... then had a 50%-off sale. The end result? The store was essentially selling the line at cost. Don't make the same mistake.

Forgetting to take all costs into account. In order to price correctly -- every cost needs to be identified. Even "little" things like credit card processing fees -- which typically add 1% to 2% on every transaction -- add up over time. Other items, like delivery or shipping costs, can also sneak up on you. View them as diligently as you would your cost of goods sold as having an impact on your bottom-line.

Finding out what competition charges and doing the same. Instead of "following" your competition, do a bit more homework and start to discover and uncover the value you truly offer your customers. Then price for value. That way, you are in an excellent position to defend your price against the competition, with a lengthy list of your own "reasons why" your offering is worth its price.