Have you been wondering how to price your product? Take a look around your home and office: whether it be an Apple MacBook Pro, ergonomic office chair, Canon Laser printer or the car you drive, each and every product you purchase has its own uniquely generated price resulting from quite a few unique variables.
So, what does this mean for arriving at an actual price tag for the products and services you wish to market? It means pricing your product isn’t easy, but the simple acknowledgement of this truth is the first step toward finding a price that works.
Key Price Influencers
Let’s laser focus now on several of the big price influencers.
How does the market influence pricing?
First, your marketplace provides you with an environment that either allows for a price fit or, conversely, an epic misfit. So, be crafty and try to satisfy demand or generate it.
Observe other market players. Ask questions like: What are substitute products doing with their pricing strategies? Note that a successful pricing strategist has peripheral vision and sees other industry incumbents as benchmarks, but also as launching pads for your own, more evolved strategy.
You may aim for scalability, to become a price leader. However, choosing this as ‘the right’ strategy is largely subjective. If you supply artisanal kimchi (raw, naturally fermented vegetables) to a small market of deep pocketed Florida retirees, higher price points would not be out of the question. On the other hand, if your market is overcrowded and scalability is the norm, high prices are not in the cards for your particular product offering.
Now that we’ve touched lightly on the influence of marketplace (i.e., industry competitors, cost drivers and customer expectations) it’s important to understand how these factors give form to your product or service offering. You can play with product pricing, but in the end the market environment will determine what it will bear.
How does cost influence pricing?
But what does cost really mean for your pricing strategy? Well, it’s important to know that cost does not equate to price. Or rather, should not equate to price. Of course, cover your costs, but consider the unique value of your product and don’t be ashamed of raking in profits.
After all, a basic level of monetary incentive can serve as a motivator for innovation and long-term success. Value, not cost, is the real price measure, and it goes beyond the bare bones of product manufacturing and service delivery.
When The Price Isn’t Right
So, with the above-mentioned factors in mind, let’s play out a scenario where you start with a low-cost price that appeals to your customers.
Over time you gain market prominence and begin to raise your asking price to mirror the value you perceive of your product or service. Or, as progress dictates, perhaps your product has updated features that requires a higher asking price.
© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.