Setting prices randomly means you don't know the basics

Thank you as always! This is Kaiun-san.
Looking forward to working with you again today! 😊

Since starting my own business and side hustles, there is something that feels fresh.
That is the fact that you can freely decide your own prices.

This is something limited to those with authority in the workplace, even for salarymen.

A new employee cannot just go around changing product prices on a whim.
Even for sales staff, selling prices are determined by the company, and even when offering discounts, the range is strictly regulated.

If you give a discount that exceeds the regulations, you will have to write a formal apology letter.

As you can see, when conducting business in an organization, you need the authority of the top, but even in a sole proprietorship, you, as the top, bear all that authority.

For this reason, you are the one deciding the prices of goods and services, but there are many unnatural aspects to how these prices are being set.

In short, I see things both online and in the real world that make me think the prices were set randomly.

"The market price for this product is about this much, so let's make it XX yen."
"This isn't selling very well, so I guess XX yen is fine."

Aren't you setting prices like this?

If so, it can be said that this shop does not know the basics of business. Pricing is very important, and if you don't grasp the basics of trade, it becomes a problem that affects the survival of your shop.

So, what are those basics?

To put it very simply, business is classified into these three categories.
☑️ Cheap
☑️ High-end
☑️ Supportive (that's what I, Kaiun-san, call it)

"Cheap" is, literally, a shop that sells based on low prices. In other words, a strategy of high volume and low margins. I suppose this is common among large corporations.

"High-end" is, as the name suggests, a shop that handles luxury goods.

"Supportive" is a business model that does not belong to either of the two above. For example, work where you deeply understand the needs of each individual customer, or provide services that scratch where it itches, earning immense trust from customers who say, "I'm so glad you're here."

Which one does your business fall under? Your pricing will change depending on this.

Is what you are selling something to be sold cheaply?
Or is it something high-end?
Or is it something that supports people and fulfills their needs?

If you are in a business model of purchasing and selling ready-made products and are aiming for high volume and low margins, then it will be a full-scale discount sale. You must commit to low prices.

But you probably won't be able to beat the big corporations.

If you are dealing with luxury goods, a high-price strategy is naturally essential. Since you are handling high-quality, expensive items, you can afford to be aggressive with your pricing.

On the other hand, there is the "customer-centric" business model.
This is suitable for sole proprietorships and small businesses. In fact, Kaiun-san also belongs to this "customer-centric" business model.

By being close to the customer, you can differentiate yourself from competitors, and you do not need to match the market prices of other companies.

For example, let's say there is a "typical tire shop" and a "customer-centric tire shop".

To differentiate itself, the "customer-centric tire shop" thinks about how to address the customer's specific needs and implements the following:

They remember the faces, names, and car models of customers who visit the shop.

For customers who buy winter tires, when they come in for a tire change in the spring, the shop carefully stores the tires until the next winter.

They regularly mail newsletters to customers with information on car maintenance and local gourmet spots.

If such a tire shop existed, you would surely become a fan of that store.

What does this mean?

That's right.
Even if the price is a little higher, customers won't cheat on you by going to other tire shops. Since the prices of other companies' tires can be found out immediately if you look them up, customers won't mind if you add a little extra to that price.

When people feel that they are known and cared for, pleasure hormones are released, and they feel good.

Therefore, if they are going to buy the same thing, they will choose to buy it at a shop that makes them feel good, even if it is a little more expensive.

Isn't that the case for you when you are in the position of a consumer?

If you are just blindly setting prices at random, I want you to review your current business model and set your prices based on which of the above categories you belong to.

By the way, regarding the luxury route, you might imagine things like precious metals, luxury watches, or brand-name bags, but it is actually a field where even sole proprietorships can compete effectively.

For example, original products.

Yes. Your own original products. Things that only you can create. When demand arises for such items, you can do business with confidence.

Speaking of originals, Bizen ware is a prime example.
Once your name becomes well-known, sales can be sky-high (laughs).

If you have an original work on hand, try listing it on Mercari at an aggressive price as a test.

In today's world, you never know what will sell.
Narihiko Kaiun

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