Thursday, September 27, 2012

How Entrepreneurs Maximize Earnings By Charging What The Market Can Bear

The main responsibility of entrepreneurs is to create value that people are willing to pay for. In doing this, they must first and foremost be able to provide what customers want and are willing to exchange money for. The product or service which many customers want is what can give them good feelings and or help them to solve a problem. Their ability to pay is influenced largely by how desperately they need that product or service. This is what provides the delicate balance between what the entrepreneur charges and what the customers are willing to pay. That is the market value which directly determines how much the entrepreneur makes. It is governed by simple demand and supply economics.

In the market place, the higher the value of the product or service produced or rendered by an entrepreneur, the more money she makes. The more of such products or services she is able to sell, the more money she makes. The fewer her competitors, the more money she makes. The more strongly people want what is on offer, the more the money that is made by the producer. More money is also made from a larger number of people who want the product or service. The more the ability and willingness of people to pay for what is on offer, the more the money that is made. All these are determined by the market which simply works on the economic principle of demand and supply. Knowing the ideal price to charge which people will be willing and able to pay for a product or service is the surest route to making money in any business. That is what smart entrepreneurs know and use to maximize their earnings.

There is no hard-and-fast rule which dictates what an entrepreneur can charge for the value she is creating. Pricing is at times determined by experience, market research efforts or even trial and error. The most important determinant is what the buyers are willing and able to pay. That is the same thing as what the market can bear. Any entrepreneur who is able to strike this delicate balance makes more money than others. Those whose charges are at variance with this value make less money. Those who charge too highly also make less money because fewer people buy when the price is too high. The key is to find out exactly what the market can bear and base your charges on it. That is how best to maximize earnings and remain in business. It is what smart entrepreneurs know and use effectively in their chosen businesses.

In the market place, entrepreneurs always want to get top dollar for what they produce. Buyers on the other hand shop always for high value at low prices. The sellers and buyers usually meet at some point that allows each party to believe they have got what they want. That is the price that allows the entrepreneur to earn satisfactorily and the buyers to spend prudently with satisfaction. It is usually a win-win situation on both sides if that balance is struck. That way, the buyers buy more and the sellers sell more. This relationship enables the entrepreneur to maximize earnings through a good crop of loyal and satisfied customers who keep buying.

Everyone goes into business to make money. The money is made by way of repeated and continuous sale of a product or service people are willing to pay for. Buyers as of habit pay money for anything they believe will satisfy them more than the money they are paying. That is what smart entrepreneurs rely on to create value and offer a product or service that is worth much more than the money it sells for at least in the eyes of the buyers. With that, buyers usually buy the product or service in more and repeated quantities. That way, the entrepreneur is able to maximize earnings from a continuous and expanded sale of the product or service as a consequence.

Sule Yesufu, a Certified Speaking Professional, is a Strategic Partner in S D Y Management Consult, a firm of Investment, Small Business and Entrepreneurial Consultants. An expert in Small Business and Personal Development, he focuses on communicating his ideas and thoughts mostly through his Training Seminars and popular free blog. He offers useful tips on Self-Improvement, Personal Finance, Entrepreneurship, Current News, Politics and Business in Nigeria, the most populous country in Africa.

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