Good points by Craig and Tim - thank you for contributing on these important topics. I would like to add my perspective from counseling both owner/sellers on the BizBen ProSell Program and motivated business buyers on the BizBen ProBuy Program.
Here are my observations with assisting both owner/sellers, brokers, and buyers on pricing strategies:
1. Most owners when they first go to sell their small business price their business too high. Remember 70% of all California small businesses never end up selling - with the main reason being too high of asking price. The second reason is that the deal structure that the seller has determined best has not taken into consideration what may be best for potential buyers as well (remember the deal structure has to benefit both parties for the deal to get realistically completed!)
2. Since I do a lot of business purchase financing (consulting and placement) - if a business is not priced "correctly" a deal will not get the funds for financing - most sellers and buyers don't take this into consideration tanking many deals unnecessarily. Bottom line you need to have a realistic price on the business being sold to get business purchase financing (SBA lenders mandate a 3rd party business appraisal during the escrow/closing process)!
3. The first 30-40 days in a business for sale advertising campaign online is the most important time period for sellers! If a business is overpriced and then the owner tries lowering the purchase price over time - this can look suspicious to potential buyers who may be apprehensive about such moves. Many buyers tell me they ignore sellers in many instances who "play the game".
5. On the topic of not putting a price on a small business (under $1M in sales price) - when going to market - in my opinion this is not necessarily the best strategy. Most buyers I consult with on the BizBen ProBuy Program tell me they feel uncomfortable making an offer on a business were there is no price listed. They feel they don't want to "insult" the owner with a potential low price and they also feel they don't want to overpay for the business (this is a very real concern)!
6. Bottomline when you go to sell a business set an asking price that makes sense (have a realistic reason/narrative of how you determined the price - know the return/ROI for the buyer etc. based on the asking price and why it makes sense for them as well, etc.). Buyers love to hear how you "realistically" determined the selling price (and deal structure) - it shows the you are also concerned about the entire deal and that potential buyers are getting a "fair" price and deal.
This topic of pricing a business for sale correctly (when first going to market) and whether to show a price on a business (verses leaving the asking price "hidden") are really important topics and will be addressed in several BizBen vlogs and podcasts over the next couple weeks!