A rule of thumb is that the return must equal what the owner could receive on a similar risky investment. At this point the owner has established a realistic range of acceptable prices, all of which cover costs, pays the owner a salary, and provides a return on investment. There are three primary ways you can set the price. Competitive pricing means setting your price not much higher or lower than the competition. All pricing decisions are controlled to some degree by the competi-tion.
Competitive pricing is perhaps the easiest to determine, but has disadvantages, as well.
It is some- times difficult to determine who the competition is, ie. Competitive pricing requires constant monitoring of the competition s prices, and places you in a reactive position rather than as a proactive decision-maker. Using competitive pricing may not cover all costs and your competitor s prices may not reflect the image you desire for your own business. Value pricing represents a pricing strategy that typically occurs within small niche markets. The uniqueness of a product allows the owner to charge extra.