Pricing Your Products and Services Effectively
The way you price your products and services is vital to the success of your marketing strategy and business. Your prices will depend on factors such as the value you provide, who you serve, and the goals you have for your business.
1. Analyze the Marketplace
Look at the high-end, low-end, and mid-range prices of what your competitors are charging to get a sense of what customers will pay. You can also survey customers or look at product reviews on sites such as Amazon.com to see how satisfied customers are with the products of your competition.
2. Get Clear About Your Goals
What goals do you have for your product? You may give away some products such as a download for free or at a discounted price to get new customers or clients. You might also have some products that are average price and some that are premium priced. Also, some businesses offer only premium priced products or services. This will depend on your goals for your business.
3. Determine the Cost of Producing Your Product
By finding the cost of creating your product or service, you will have a starting point for arriving at a price to charge.
Physical Product Cost
For physical products, consider costs such as customer service, cost of product materials and assembly (if any), printing and shipping costs. Also consider costs such as rent and website hosting.
Service Costs
Determining costs for services can be more challenging than determining costs for physical products because, for services, you also need to consider factors such as your skills, training, the value you put on your time, and experience. Your selling proposition will also affect your price. Do you offer a specialized service, exceptional customer service, or high-end services to high end-clients? Or do you offer discounted services?
You also need to decide if you will be charging an hourly rate, offering packages, or a mix of both. In order to offer packages, you need to determine the amount of time that the tasks in the package will take you to perform.