How To Price Your Products

Profiting By Picking The “Right” Price

 

Dollar Sign in Space - Illustration

 

Ask people to pay a heavy price for your product and they will stop buying it. Ask people to pay too small a price, and people will tend to assume that your product is of a poor quality. On the other hand, if you price your product optimally, it will not only fetch you profits, but it will also attract customers toward your product. Here is how to price your products and services:

  • Know your target audience

You would need to find out how much your customers are ready to pay you for your products and services as well as how much your competitors charge for the same products or services. Directly matching a price can be dangerous. You should, therefore, price your products and services in such a way that it can cover both your direct costs as well as your indirect costs.

  • Choose the best pricing technique

Add a mark-up percentage to your product costs to make sure that your costs are covered in the pricing. This will vary based on the sectors, businesses, and the companies manufacturing the products. You could also base the price of your product or service on the value your customers place on the product or service. Make sure you decide upon the right approach to price your products and services.

  • Work out your costs

Include any money that you have spent on developing the product or the service in the final price. The more you sell, the higher the costs will be and therefore, the price should also go up. Work out as to what the percentage of the fixed costs is that need to be included in the final price of the product or the service.

  • Consider cost-plus pricing

You will need to consider the additional costs in your pricing or keep a margin in order to be able to break even. This is usually expressed in the form of a part of the breakeven. Experience, industry norms, or the knowledge of the market will help you decide on what this margin is. If your price looks too high, then accordingly trim it, so that the price is not too much for your customers to pay. Be aware that if you choose this pricing model, then you would need to understand that it assumes that all your units would be sold. If you do not, then your profit margin will be lower.

  • Value based pricing

In order to set a value based price, you will need to know your market very well. For instance, a hairdryer might cost $5 to get it to the market. However, if you know that its market value is higher, then you can price it at $10.

  • Think about the other influences on the price

What impact will charging value added tax have on the pricing of the product? Can you keep your margins to a minimum, if you want to sell the maximum number of units of your product? You might need to calculate different prices for different regions. An example would be to sell at a psychological pricing such as $9.91 instead of $10.

Make Your Price Sell!

Want to sell what you know on the net? Make Your Price Sell! is the BIBLE for setting the perfect price for your product. Get the most out of your products with …

Additional Resources:

Make Your Price Sell!

Want to sell what you know on the net? Make Your Price Sell! is the BIBLE for setting the perfect price for your product. Get the most out of your products with …

Pricing – Wikipedia, the free encyclopedia

Line pricing is the use of a limited number of prices for all product offerings of a …. your pricing and marketing strategy should be influenced by your customer’s …

Pricing new products | McKinsey & Company

How much should you charge for a new product? Charge too much and it won’t sell—a problem that can be fixed relatively easily by reducing the price.

 

About the Author Tiffany Domena

Hi! I'm Tiffany. I'm a mom, wife, Internet Marketing Consultant, and the founder of KOHA. My passion is to share everything I know about applying the Bible to daily life, starting a ministry, and scaling a ministry online.

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