The price of a product or service plays a part in whether a business sells or fails. Products that carry a steep price might keep potential customers away. But if you price your products too cheap make your operations suffer. You can’t support your business without decent profits. It’s important to set the right amount to make sure that both sides will benefit from the transaction.
The ideal profitable margin depends on the amount of sales you want. List your material, labor, and overhead costs, from commercial property rental and utility bills to wages, and add them all up. For instance, if your profit is about $1,000 per month and your expenses range up to $15,000, then set a price that will net you at least $16,000.
Know Your Competitor
Look for competitors in the same industry that have been in business for a long time. The way they set the prices of their products and services can serve as a benchmark to know if you’re under or overpricing. Track their pricing online through websites like pricemanager.com or simply visit their official site and social media accounts to know if there’s any difference, especially during seasonal changes and holidays.
Define the Value
According to Info Entrepreneurs, value is the price that customers think the goods should be. If you can’t meet them, it’s like showing that you have no interest in satisfying their needs. Make a quick survey in your locale and find out how much people are willing to spend for a specific item. This can give you an idea about their financial situation and consumer behavior. If the survey results aren’t feasible, at least try to meet their demands or offer something else to compensate.
The right pricing can make or break your business. Plan this carefully to avoid losing customers and make the most of the products and services you offer.