Face to face selling may require a sales person with powerful sales presentation skill, despite having a fancy presentation slide or computer animation for the presentation, the verbal communication and interaction with the prospect is much more effective in closing a sale. In most case, the home based business or small business owner is able to successfully get the sale close if they have a chance to meet with the customer, with this, the product knowledge must be in depth in order to answer any question that might be shot by the customer during the presentation.

Many home based business and small business is starting out small and the business owner would probably the sales person with the target of generating as much sales as possible to get the business rolling. Your effectiveness as a sales person will be a critical factor in the success of the business.

i) Competitive factor
We do not have control over what our business competitors setting the price for their product or service, they may sell cheaper than you with the same quantity, more expensive than you or even same price as you can provide.

In most of the industries, the price range are usually falls in a certain range among the market players, it is hard for the companies to undercut each other significantly. As a home based business owner, you could probably charge lower than your competitors just because you have a lower overhead cost.

ii) Demand factor
If the product or service that you provide is with high demand, you probably could save much of your marketing and advertising bucks, you can charge your customer at premium price and you can probably do not need to give a discount. On the other hand, if you are selling a low demand product or service, you might have to lower the price to capture more market share. However, no matter how low is the price you can set, there is a bottom line where you meet the breakeven, so know your price before you start selling.

iii) Economic factor
If the economy is strong, then the consumer has more cash on hand to spend which could keep the product’s price stable. If the economy is down, the product’s price is usually lower where the business owner have to capture as much sell as possible from the customer with limited cash on hand. If it is foreseen that the economy is going downturn, do not ever try to launch a luxury product or service, because the consumer will rather keep the cash on hand or to spend it on the basic needs than to purchase a high end luxury product.

i) Penetration pricing

The product or service is set at the lowest price in the market place, with this strategy the product or service have to be sold at high volume to meet the profit margin. This type of strategy is widely used by the franchiser, series chain retailer or the market leader and it is quite difficult for the small business to survive if to implement penetration pricing strategy, if they do so, they are actually competing with the giant players in the market.

ii) Fair pricing

The price is set in accordance to the quality or quantity of product or service to be sold. This strategy is widely used by the small business and home based business owner where a fair price is offered to the consumer and they can concentrate to develop the product or service to be sold in the highest quality.

iii) Premium pricing

The price is set at a higher level and this price strategy is more to be used on customized service, personalized product, and high technology product. The consumer is to pay a premium price for the design instead of the service or product itself.

iv) Discount pricing

Discount pricing strategy can be used to achieve the marketing or advertising objective such as during a seasonal festival. The price can be set at zero profit just to clear out the old stock where it maybe near the storage life time. There are several of discount pricing strategy that can be used such as quanity discount, seasonal discount, 2nd purchase rebate, trade in discount and so on.

These pricing strategies serve as a guideline while setting the price for your products or sevices, you can use these strategies for your home based business or customize one for the business, as long as it is suitable for the business.

Lets take the business consultation service for example, if you need $5000 per year to run this home based business and this cost including the advertising, marketing and other expenses, then the business owner would need to determine an hourly rate. If the business owner choose to work 30 hours a week which is about 1560 hours a year then the business owner need to charge an hourly rate of $3.3 to breakeven. If the business owner charge an hourly rate of $6, then they will make a profit of $4360 per year.

How much to charge is usually determined by couple of factors, the home based business owner have to calculate the rate base on their own schedule and how many clients they are targeting to handle in a year.