5 Things To Consider Before Pricing Your Product
Okay so you’ve spent a hundred hours coming up with a new product, you’ve figured out your supply chain, and your retailers are dying for your product. All done right? Nope. Read on for the most important stage of product development: pricing!Understand All Your Costs
When you are looking at how much to charge for a product, it’s far more than just the cost of the materials that go into your product. It’s also the sourcing and assembling, the packaging, the shipping, etc.Consider the quantity – if there are more or less volume being produced, will your costs go up or down?What is your overhead to produce these items? Salaries, rent, subscription services, and so on.
Know Your Target Audience
Is this an essential item and customers will ignore the price?Will your customers work hard to find the cheapest available?
Consider Your Competitors And Where Your Product Fits
Is your product the best quality that’s available?Does an existing brand have a monopoly on the market (e.g. Kleenex)What niche are you striving for? Premium or Great Value? Think about the classic marketing tiers of Gold, Silver, or Bronze? Does your product fit nicely in the middle?
Understand The Value The Product Is Providing
Ask your customers, what is too much to pay for this product?What if you charged double and still sold as many?Is there a dollar amount connected to the savings or productivity that your product provides?
Consider Additional Costs On Your Item
- Taxes and shipping.
- Do you price your item so it includes these items?
- Does the price round to an even number or a .95?
Improving the way your business handles product information will set your business apart and help you scale.