How Do You Price Your Products? Part 2 of a Simple How-To series
1) Know your costs
2) What are your competitors charging?
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.
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