Pricing for profit

Do you price for profit?

If you study pricing structure through both theory and practice you will know that prices result, or at least should result, from evidence of consumers’ psychology and financial analysis, and which are conducted by specialists in pricing.

But when entrepreneurs price their products, they typically don’t take time to sample their market nor study market price sensitivity. We (mostly) calculate the cost of delivering whatever we do then add a margin that gives us a profit and then look at the market to see where our price point sits compared to our competitors.

How to price for profit.

We exhibit at a few events and one local business show is coming up and we’ll be there. But before confirming we have been looking at the floorplan to choose our ‘pitch’.

There are the obvious factors to consider of foot fall and how visitors will walk around the show, after all you don’t want to be the first stand as the walk in or the last stand as they walk out. Typically, a visitor will spend 20% of their time assessing who is exhibiting, where they are and who they want to speak with. Then once they have prioritised this list they will walk the floor from pitch to pitch. But they’ll spend this 20% of time strolling past the first few pitches or stomping passed the last few on the way out.

So we when looked at the floor plan we found ourself surveying the middle ground and looking at various pitches.

Should we chose a 3m * 2m, a 2m * 2m, a 2m * 1.5m or the tiny 2m * 1m?

Yes, location, location and location comes into play but then there is price too.

The 3m * 2m is £1,026, the 2m * 2m is £684, the 2m * 1.5m is £513 and the 2m * 1m is £342.

A price to suit every budget you may think.

A single price is what we see.

The price is straightforward, it is £171 per sq. metre.

Nothing fancy at all, no discounts for spending more, no premium for a centre pitch of high footfall.

Just £171 per sq. metre.

They’ve missed a trick on their pricing.

They didn’t price for profit

We’ve grabbed a bargain.

With my market insight and understanding of why customers buy and at what price point they could have charged more and therefore increased their bottom line profit.

This type of insight is invaluable and much better than your ‘best guess’.

While this might sound like a lot of work, it’s most certainly worth it.


Because pricing could be the main driver of success (or failure) when launching a new product or service.