A key ingredient for success in any business is proper product pricing. Done right, your pricing strategy would enhance your sales, which would then establish a solid foundation for a prosperous business. On the other hand, if you price your products wrong, you could create major problems that could derail your plans for success. Consider the following when you price your products.
You should price your product so that it could generate sufficient revenue for covering your production costs. When doing this, you need to consider the prices for materials, labor, assembly, shipping, rent, as well as other related costs. When you’ve determined the average cost for every product, you could then see how much revenue you have for covering your expenses. But don’t forget about making a profit, breaking even is great, but you’re in business to make a profit after all.
Your Prospective Customers
This is among the most inexpensive and effective strategies to help you price your products. You could likewise perform a more thorough Internet and market research that would outline your target customer’s psychographics and demographics to find out their purchasing behavior.
How does your competition price their products? When you research your competition, scour the Internet and buy their products to see and experience their products firsthand. See what customers like about their products and try and determine what value buyers get from those products. If you find out that your products offer increased value than your competitor’s products, you could test a higher price to communicate to your target customers that your products are more superior.
On the other hand, if your competitor’s products offer more value, consider setting a price that would indicate to target customers that yours is a high-quality, but more affordable option. However, this is a nice starting point, keep in mind that although you want to remain competitive, your price must above all else reflect the value of your products. Also, if you have retailers for your products, PriceManager suggests you ensure that they adhere to your minimum advertised pricing policy to ensure that your brand value stays intact.
Essentially, your product pricing strategy should integrate the psychology of your target customers and your business economics. Implementing competitor monitoring and analysis as well as basic market research would help you in finding the right price for your products.