How Do You Price Your Products? Part 2 of a Simple How-To series

How Do You Price Your Products? Part 2 of a Simple How-To series

As I previously discussed in part 1 of this series , the goal of most businesses is to turn a profit. Non-profits and service organizations are no different. They raise funds, increase revenue, reduce costs, all in an effort to get maximize profits and fund the dream. Sadly, failing to position a product or service appropriately is one big reason businesses fail.
This article is the second of a series of articles geared towards providing you easy steps to determine the right price for your product or service.
The first step in learning how to successfully price your products or services is: 

1) Know your costs 

If you’re in the business to imagemake a profit you need to ensure you get paid for your passion and bringin enough money to cover your expenses.  This is something often referred to as the break even analysis. Click on this link to read the first article in full.
The second step to setting a successful price is to know:

2) What are your competitors charging?

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Once you’ve read the previous article you’ll realize that it’s relatively easy to identify your break even point. The real question now becomes, how much are your competitors charging? After all, you want to maximize your profit by getting the most you can, but you don’t want to price yourself outside of consideration.

Another question you need to answer is, where do you want your brand to be positioned when compared to other alternatives?

While not entirely the hardest questions you will ever face, these questions are very important and their answers change. First, start by conducting some market research and see what your competitors are charging.  I’d suggest going into the inter-web and perform a few searches. If you have competitors in nearby brick and mortar stores, visit their stores and check out their prices.  Sign up for their email listing, pick up their catalogs, and stay ahead of the curve by monitoring their strategies. Remember the old adage, “keep your friends close…”

Next, think about where do you want your brand to be positioned? Positioning is defined by Entrepreneur.com as:

How you differentiate your product or service from that of your competitors and then determine which market niche to fill”

Do you plan of mass producing, catering to many consumers, offering lower than average price, or do you rather cater to a niche market, offering luxurious products that demand a higher premium? These questions poke at your brand image, and only you can decide which route you want to project (initially).

Related Content: What inspires your business? 8-tips to consider NOW

Here’s some examples, when you think of automobile companies, and you compare the following three brands, here’s a sense of what a survey I conducted showed:

Manufacturer / Survey Most Common Opinions

Ford: Value driven, Cheap, American, Family Owned

Mercedez-Benz: Luxurious, Expensive, Import

Volvo: Safety, Older driver’s car, Not fun to drive

Hyundai: Great Warranty, Affordable, Inexpensive

The comments and opinions of those surveyed showed very distinct and different perceptions for each company. Just like the big automakers, we must tailor our services and brand towards the prospects we want reach. Except, we have the flexibility to change quicker since we aren’t dealing with multi-billion dollars in assets and marketing to shift. 🙂

Understanding what your costs are , and what your competitors are charging for similar products will help you adequately and successfully price your products and services.

Thanks for reading this article and stay tuned to learn how tiered pricing can help bolster your revenue.

UnawareHave comments, questions, suggestions you’d like to share? We’d love to hear them!

Please drop a note using the comment box below, and/or hit me up on any of the social media links listed!

Lastly, if you have a question you’d like to ask, hit me up on Twitter, handle is @AJRos02 and use the hashtag #AskAJ I’ll reply back and/or write an article answering your questions.

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4 thoughts on “How Do You Price Your Products? Part 2 of a Simple How-To series

  1. Enough can’t be said about market research, especially for those just venturing out on there own. Taking the time to know what your competition is charging is important. However during the research phase look for review from customers of the business. Are they satisfied or ranting. Testimonials on a site are helpful but remember they are controlled by the company. Learn from there mistakes and price according to those reviews as well.

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