No matter what product or service you provide, the price that you charge your customers will affect the success of your business. Make the right decision on product pricing by taking note of the factors below.
Determine Your Target Market
Everything about your product and/or service involves your market. Because of this, it is important to determine them before pricing a commodity. You need to know how much customers are willing to pay, and how much competitors charge. Doing this allows you to meet direct competition and target the audience that perfectly suits your business.
Choose a Pricing Strategy
There are many pricing strategies and choosing the right one for your business can maximize your product and/or service’s profitability. Companies, whether big or small, can use a variety of techniques depending on their marketing objectives. Some popular strategies are premium pricing, economy pricing, and psychological pricing. You can also use a competitor monitoring software to fully identify the strategy you need, such as from PriceManager.
Define All Costs
Markets and strategies are important, but you should put the spotlight on your overall product when deciding on a price. Define all of its costs, including money spent on researching, developing, packaging, distribution, and even marketing collateral. Also, don’t forget to include a percentage of your fixed costs, which entails overheads such as rent, rates, and employee wages.
Recognize the Market You are Part Of
The market you are part of, whether retail, food, beauty, or healthcare, will play a huge part with the way you price your products. Recognize where your market is headed. Identify its demands and keep track of external factors that will maximize or minimize its potentials. These factors may include national and international laws; existing and future competitors; and the actions they will take.
Product pricing is tricky but it’s important to give a lot of thought and research on it as it will not only determine the success of your product and/or service, but also the success of your business. Take these four factors into mind to create a profitable decision for your company.