How Do I Set The Right Price For My Product Or Services?

Pricing your offers is essential regardless of the product or service you sell. When done right, you can maximize your income without scaring away your customers.

But how do you know if the price you have set is correct?

Frankly, people are not always looking for the cheapest thing in the market. If you find that you are continually losing your target client, then you may be a bit high.

Never hesitate to charge what you are worth.

There are many differences between buying the cheapest and buying to get the best value out of your money. Customers will pay any price for a product or service they think will give them the best benefit.

That said, setting a price for your product or service won’t get you far. It would be best if you were strategic. Here’s how:

1. Know your customers

What customer problems or issues can your business solve? What are they looking for in a product or service in your industry? The needs of your market should come first before everything else as you develop a pricing strategy.

2. Know your competitors

What other businesses exist in the local market? Whether they sell the same products or services as your business, you need to know what makes your competitors tick. As a secret shopper, you can gather valuable intelligence by visiting their stores or e-commerce sites. You don’t have to copy what they are doing, but you can learn about their strategy and use it as a reference for your own.

3. Know your overhead expenses

How much does it cost to run your business? Get the sum of all your business expenses like rent, monthly utility costs, and marketing. These make up your fixed cost which is crucial for calculating your target monthly, daily, weekly, and hourly income.

You also need to calculate the cost of goods sold, which sums up how much it costs to process, manufacture, and ship your product.

Of course, you are running a business to make a profit. So, apart from adding overhead costs and the cost of goods sold, you must compensate yourself by marking up the price.

4. Know how to structure an offer

You don’t have to follow standard pricing trends in your industry, although you need to structure a reasonable offer.

If you are not sure how to do this, consider launching a product line with a unique pricing structure. These allow you to test the waters without risking your entire business.

Here are a few things to keep in mind:

Limit your options and categorize items into good, better, and best. The product you want to sell should be in the middle. Under best, come up with an offer you never thought you would sell for that price.

When you sell your best product, change your pricing with your best price, which now becomes the middle or better offer.

If you are selling a service, don’t trade dollars for hours. Instead, offer different packages with special buying incentives.

Remember that your sales volume determines your costs. When you sell more, your costs decrease because every purchase covers a portion of your total overhead. You may need to adjust your pricing if you are not getting enough monthly sales.

When making an offer to a client, please give them your highest-priced item first. You can present lower offers if they don’t have the budget for the first item.

Finally, factor in your perceived value, which indicates the amount of satisfaction your customers get from your product or service.

5. Know the market price

Apart from these factors, you should also check how many similar products or services are selling in your market. Remember, people are not always looking for the cheapest. If your business sets a standard for quality, then people are bound to pay whatever price you sell. You will know this if they are not complaining about the price.

In case you are not getting customers because of your pricing, you might not be showing the full benefits of your products or services. They are bound to learn more about your business if you demonstrate the value of your offers.

During a sales appointment, evaluate your presentation and analyze the client’s responses and feedback. If you still can’t close a deal, you should know whether you have priced yourself out of the market.

Takeaway

Pricing your product or service isn’t a numbers game. You must pull the right levers, so your business gets more customers and maintains a healthy income stream.

There is no room for guesswork regarding your pricing strategy, which is also true in other aspects of running your business.

Learn how to steer your business towards success by applying best practices and untangling the most taxing issues.

There is no point in making more money, when it is just going through your fingers. Apply The Business Untangled System and learn how to have less stress, pay less tax and make and keep more money!

Visit Business Untangled at www.businessuntangled.com or call 469-458-0447.