Youth Entrepreneurship

Menu
  • Welcome
  • Dayo Profile
  • Contact Dayo
  • JOIN OUR FORUM
  • Testimonials
  • Shop
  • Our Business Plans
  • OUR PRODUCTS
    • Coaching
    • Entrepreneurship book for Africa Students
    • MLM E-BOOK: How to Recruit and Get to the Top Fast in Any Network Marketing Business
    • Set Up Money Making Blog for Just N50,000

Make Money Online Opportunity: How I Made Over 1Million from Expertnaire Affiliate Marketing in 2022 and How you Too can start the Business.

CLICK HERE

6 Dangers in Underpricing Your Products or Services

DayoHub

6 Dangers in Underpricing Your Products or Services

Underpricing of products and services is one of the common mistakes that new entrepreneurs or business owners make. They often make this mistake in attempt to boost sales, woo customers, and overtake competitors. Most times, this unprofessional move boomerangs and hunts down these entrepreneurs and business owners.

The fear of this experience explains why a lot of businesses now have associations or boards regulating and controlling their pricing. As an entrepreneur or a business owner, are you still unsure about the effects of underpricing your products or services? Here are 6 dangers of underpricing your products and services that could help clear the doubts.

  1. Inability to Cover Costs

When products are underpriced, it means those products or services are priced below their actual market value. And the costs of manufacturing, promoting and delivering a product, is what determines its market value. For a product to be priced below this value, it means the product is priced below its actual cost.

When products or services are priced below their actual costs, the revenue that would be generated from the sales of those products would not be enough to cover the expenses, thereby leaving lapses that needs to be covered. This explains why businesses go bankrupt. Even after making great sales, the revenue can’t complement the cost.

  1. Probable Loss of Customers

Potential loss of customers is one of the biggest dangers in underpricing your products or services. When customers perceive your products or services as being ‘too cheap’ they might leave and never come back.

Products or services perceived to be too cheap are often assumed to be of low quality. This is a common human error that we obviously can’t do anything about. You can only control your prices; you can’t control how the customers perceive those prices.

Customers won’t also want to go for products that they perceive as being too cheap, because of peer pressure, and their own self-esteem. They would feel that their colleagues at work, neighbours at home, friends and family, would start to belittle them, when they get to know that they bought a cheap product, especially if there is another brand selling the same product, but at a higher price.

Underpricing your products or services would only put you at risk of loosing your customers to your competitors.

  1. Inability to Reach Financial Goals

When your products or services are perceived as being too cheap by customers, and they leave, the level of the sales you will make would obviously  be reduced, which means the revenue would be way below the target, costs would not be covered, and also profits would be reduced, or there might not be any profit in a worst case scenario.

When all these surfaces, the financial goals you planned to reach, would definitely be affected. Tis explains that it’s not just enough to establish your financial goals, you also need to ensure that your products or services are properly priced, and not priced below what they actually cost or worth.

  1. Low Market Ranking

When your products or services are underpriced, and perceived to be of low quality based on how cheap it is, it won’t only affect the product’s sales, your brand would also be affected. It would be ranked below par by the public, when it comes to market ranking.

Having a low market ranking reduces your chances of getting new customers, or even keeping the old ones. No one wants to associate with a business or brand ranked below par. Customers would stop suggesting your products or services to their friends, other brands would be cutting off their affiliation with your brand, you’ll begin to lose contact, and your network would also begin to shrink.

 

Read Also: 25 Ways to Brand Your Business

 

  1. Probable Loss of Investors

Investors don’t usually want to lose money too often, and underpricing your products would not guarantee the safety of their interests. When prices are underpriced, sales affected, revenue reduced, and costs aren’t covered, the interests of the Investors would definitely be affected, unless you as the business owner cover it up with your personal funds, which would still result to your own loss.

And even when the interests of these Investors are not affected, but the market ranking is low, they would still want to detach themselves from the brand, to safeguard their future investments. It’s still a lose/lose situation.

  1. Potential Loss of Business

You can be at the risk of losing your entire business, just for underpricing a single product. If the underpriced product affects the brand which most definitely would, the business is gone, and would require heavy promotion and advertisement to bring it back.

It would be unwise for any entrepreneur or business owner to allow a product, or pricing misconception cost him/her a fortune.

To avoid making this mistake, and putting your business at the risk of all these dangers, there are several pricing scales that you can take advantage of, to properly price your products and services for profit.

Hope you enjoy this article?

Share your thoughts in the comment session.

Contact us today for your business consultancy and business advisory services. We can help you fine tune your idea, structure your business, market your business, train your staff, consult on your retirement plan, coach you for financial success. We also write business plan and help with fund raising strategies and Grant applications. We can help you start, grow and expand your business.

Call or WhatsApp us now on 081 0563 6015, 080 7635 9735, 08113205312 or send email to dayohub@gmail.com  and we will solve any of your business problem.

 

Enter your name and email and Download our FREE eBook, get the weekly newsletter, Update on Grants, Business Opportunities & Premium Services from DayoAdetiloye.com... Joining is FREE!
Your information will *never* be shared or sold to a 3rd party.
  • Author
  • Recent Posts
DayoHub
DayoHub
Dayo Adetiloye
(B.Agric, MBA)
08105636015, 08076359735

Serial Entrepreneur - International Business Planning Consultant - Speaker - Trainer - Author - Blogger - Network Marketing professional.

- 2018 SME Business Trainer and Coaching Advisor at GIZ for SME Loop.
- 2018 YALI RLC Online Cohort 9
- 2017 Fellow, Inspire Africa Train-the-Trainer Entrepreneurship programme sponsored by US Consulate Lagos and the Dickey Center, U.S.A.
- 2016 Fellow, Tony Elumelu Foundation Entrepreneurship Programme
- 2015 Top 50 Innovative Entrepreneurs, BET5 by Diamond Bank and EDC, PAU.

He is an alumnus of Enterprise Development Centre (EDC) of the Lagos Business School (LBS), Pan-Atlantic University (PAU). Through his training, mentoring, speaking and coaching programmes, he has empowered many young people over the years to start and grow their own business, build wealth, create multiple streams of income and achieve financial independence.

- He is a Certified Trainer in Design Thinking by the U.S Consulate, Lagos and the inspire Africa Entrepreneurship Institute.
DayoHub
Latest posts by DayoHub (see all)
  • Katumu Adasi: How to survive in Nigeria without a job - February 11, 2021
  • Top 5 business and services with the highest demands in Nigeria - January 4, 2021
  • How to Become a Millionaire doing Rice Farming in Nigeria - January 4, 2021

Share this:

  • Tweet
  • WhatsApp

Related

Prev Article
Next Article

No Responses

  1. Pingback: 5 Effective Follow-Up Strategies That Will Automatically Increase Your Sales
    September 3, 2020

Leave a Reply Cancel Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Search this Blog

Grant Winning Blueprint

Ecommerce Business

Follow me on Facebook

Follow me on Facebook

Follow me on Twitter

My Tweets

Youth Entrepreneurship

…Raising Millionaire Young Entrepreneurs
  • About
  • Dayo Speaks
  • Disclaimer
  • JOIN OUR FORUM
  • Shop
  • Privacy Policy
  • Sitemap
  • Advertise With us

About Us

Dayoadetiloye.com is a property of Dayo Adetiloye Business Hub committed to connecting entrepreneurs with resources.

We are one stop Business Resource Center where we help you discover, Develop and Fulfil your business potentials.

On this platform, we help you develop business plans and strategies, connect you with funding opportunities and share with your business opportunities.

Facebook Community: https://www.facebook.com/groups/156197005130352/

Twitter: www.twitter.com/dayoadetiloye

Email: Dayohub@gmail.com

Popular Posts

  • 50 SMALL SCALE BUSINESS IDEAS IN NIGERIA AND STRATEGIES TO START IT
    50 SMALL SCALE BUSINESS IDEAS IN NIGERIA AND STRATEGIES TO START IT
  • Peter Obi's Biography, Net Worth, and Rise to Popularity
    Peter Obi's Biography, Net Worth, and Rise to Popularity
  • 25 BUSINESS IDEAS FOR UNIVERSITY STUDENTS IN NIGERIA
    25 BUSINESS IDEAS FOR UNIVERSITY STUDENTS IN NIGERIA

Popular Category

  • Affiliate (34)
  • Articles (654)
  • Business Grant (341)
  • Business Opportunities (419)
  • Business Plan (682)
  • Competition (45)
  • CV Writing & Career Guide (61)
  • Dayo Initiative (13)
  • Entrepreneur of the Week (19)
  • Executive Summaries (148)
  • Expertnaire Affiliate Marketing (4)
  • How To (132)
  • Job Vacancy (18)
  • Latest Post (1,624)
  • LOAN (23)
  • MLM Coaching (10)
  • Network Marketing (173)
  • NEWS (21)
  • Norland Nigeria (69)
  • Ofada Rice (6)
  • Online Marketing (49)
  • Product Sales (7)
  • Recharge and Get Paid (11)
  • Scholarship (7)
  • Scholarships (11)
  • Sponsored Post (219)
  • Trainings / Events (148)
Copyright © 2023 Youth Entrepreneurship
Dayo Adetiloye Business Hub

Ad Blocker Detected

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by disabling your ad blocker.

Refresh
Enter your name and email and Download our FREE eBook, get the weekly newsletter, Update on Grants, Business Opportunities & Premium Services from DayoAdetiloye.com... Joining is FREE!
Your information will *never* be shared or sold to a 3rd party.