Growth for Good Insight: Pricing with Purpose. We all know that in the Highlands and Islands, community ties are strong. Businesses are employers, educators, and advocates, so it’s crucial to ensure their health. Setting the right prices isn’t a business task. It’s a vital strategy for staying strong over time. This helps your business handle challenges and keep serving our community.
Many SMEs still price based on emotions. How tempting is it to match competitor prices, give discounts to win jobs, or lower your value to seem “affordable”?
But focusing on purpose-driven growth has many benefits. It signifies pricing that reflects value, supports reinvestment, and enhances your margins. This lays the groundwork for a more robust and successful future.
For more on this, there is an excellent article by the Small Business Charter here
Why Pricing Needs a Reset
Under current economic conditions, inflation and high expectations mean under-pricing can’t last. When I first started in sales, I recall someone telling me, “You can’t eat goodwill.”
It is true, you can’t scale goodwill; you need to scale your margin. Matching market rates doesn’t show your true value or costs. Also, discounting can make customers see your products as less valuable. Fear pricing (“I hope they say yes”) hurts business confidence.
If your price doesn’t include profit, you’re relying on debt, stress, or underpaid labour. That’s not sustainable or fair.
Purpose-driven pricing starts with margins.
Know your numbers. Contribution margin, the money left after variable costs, is crucial. It demonstrates the extent to which each sale contributes to growth. The simple example is this: If you sell a product for £100 and it costs £60 to produce, your contribution margin is £40. This margin covers your rent, your team, and your future.
Aim to increase your margin before boosting your revenue.
Price as a Positioning Tool – Premium, Tiered, Transparent.
Your pricing conveys a message that extends beyond affordability. It conveys confidence, quality, and clarity. For example, premium pricing indicates expertise and results. Tiered pricing helps to serve more customers without compromising on quality. Whilst Transparent pricing builds trust and attracts the right clients.
Across our region, reputation often spreads faster than any advert. So, pricing is more than numbers; it’s about messaging. It’s a strong tool that helps you share your values and mission. This way, you can attract the right clients and build a meaningful brand.
That’s why this article is called: Growth for Good Insight: Pricing with Purpose
Build Value Ladders; not every client needs your top offer, but all should pay something.
Create a range of offers:
- Entry-level (e.g., digital product, group session)
- Core offer (your leading service or product)
- Premium tier (bespoke, high-touch service)
This method raises your average order value. It also helps customers connect with your brand with greater ease.
Purpose + Profit
In the Highlands and Islands, businesses often set ethical prices. Still, they sometimes lack a clear plan. Ethical business isn’t about undercharging; it’s about reinvesting margins into impact. Pricing with purpose means customers pay a fair amount. This helps you navigate tough months with a sense of calm. You can also reinvest in technology, skills, and services. (remember to seek grants and help). Check out my funding videos for more tips. And you create a surplus to support your values.
Here are three simple steps to see where you stand and what to change: Check 10 invoices: Are they making a profit? Segment your offers: Can you create a value ladder? And finally, reframe your story: Does your pricing reflect your value or your anxiety?
Some other useful sources on this subject: Harvard Business School, this article by Mary Kyriakidi is also worth a read
