This haphazard approach to pricing has been the ruin of many small business operations. An effective pricing policy can be determined only after the owner has decided specifically what the business is, how it differs from the competition and what the cash flow needs are. Pricing should be determined through history and mission, not by accident. Products or services are competitively priced. For example, a small hardware store is not competing with the chains, but with other small hardware stores that offer the same products and services.
Services are harder to price than goods.
It is difficult for the buying public to determine the fair price for services, and comparative shopping has much less effect in service industries than it does in hard goods industries. Business provides volume discounts. Volume discounts are essential for large volume purchasers of goods and services. Clear volume discount policies save valuable time when dealing with customers and can even give the small business a competitive advantage. Prices are increased when warranted.