How to price your products
Product pricing is a crucial business decision. Here are 4 factors you should consider when pricing your products.
1. Your break-even point
This is the point where you are covering your product’s cost. If you price below this point, you’re making a loss, which is not sustainable.
Any price above this point on the other hand is profit, but you need to make enough profit on each unit and sell enough products to have a viable business.
2. Check your competitor’s pricing
This is crucial, because your potential customers usually will. If you have any competitive advantage, you may be able to price your product higher.
If you don’t have a competitive advantage, you should price at the same level as your competitors (or cheaper if they have a competitive advantage).
3. Price to reflect your brand image
Are you trying to position yourself as a high-quality brand in your market? If so and you have a high-quality product, you are more likely to be able to set your prices higher. You might be able to sell fewer products but make more money.
You can also choose the opposite strategy if you have a lower-quality product and price it cheaply instead, as long as you’re still making a profit on it. You may be able to sell higher quantities at the lower price, making more profit.
4. Is your product essential for your customers?
If it’s just an optional item, pricing it too high will reduce your sales.
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