Choosing the price of your products can be one of the most important decisions you’ll make as a business owner. Setting your prices too low will mean you’re not making enough money to support your business while pricing too high will prevent you from successfully selling your products to the market.
If you need help pricing your products, here are five methods you can implement to find the best price:
Method 1: Check your competitors products
If you’re introducing a product that is comparable to a competitor’s than you can use their current pricing as a backbone for your own. Don’t worry about setting your price too high or two low – it all depends on your unique selling points. Pricing too high can deter people from buying while pricing too low could ruin your overall profits – find the perfect balance.
Method 2: Create your own perceived value
If you’re introducing a product to the world that’s not yet on the market than you don’t have much to base your prices on. One great way to find your price is to look at the overall perceived value that your market determines. Share your product with a few different people around the market and ask them what they’re willing to pay for it.
Method 3: Add up the features and benefits
Products that your business is working may be replacing an existing product; take the current value of the competitive product and begin adding up the additional features your product will be offering. If your product replaces multiple products on the current markets than you could add both of them together to find your true price.
Method 4: Factor in product and time costs
Each product you create will have costs associated with manufacturing and the time your employees must place to create and take care of your new product. Factor in the overall time and effort required to create your product, add a bit on the top and you have your new price. [See an example here].
Method 5: Run a sample test in a limited market
The most effective way to find the price of your product is to introduce it to a limited market and see what people are actually paying for it. Create a few prototypes and list it within sites like eBay to see what people will bid on it – once you run a few tests you’ll find a great price that people are willing to pay.
The price of your product will make or break your business; use each of the methods in this article to help you find the best price for your products and then release them to the world!