Connect with us

Hi, what are you looking for?

Investing

How to price your product or service

When it comes to pricing it is vital that you are getting it right. Ask people to pay too much for a product or service and you will lose their business but make the price too low and you’ll be reducing your profit margins or potentially losing customers as they could assume the quality of the item or service is not up to scratch.

There are several factors to consider, price being the most important of the 7 P’s of the marketing mix that when used will help you come up with the perfect price and strike that perfect balance between profit margins, covering all costs and still remaining attractive to customers.

The Seven P’s

  1. Know Your Market
    You need to have a clear understanding of your target market and what they are willing to pay out for the product or service you have to offer. It helps to understand what pricing your main competitors are using and from that, you can decide if you are looking to match or beat their price. With this always be mindful that all of your costs are still being met.
  2. Have A Pricing Strategy
    You can either use cost-plus, which is pricing that includes adding a percentage mark up to the initial costs. Or, value-based pricing, where is based upon a monetary value amount that your customers attach to the product.
  3. Know Your Costs
    You need to work out the minimum amount you need to make to break even. This includes working out all costs for development, supplies, materials along with a percentage as to the overhead costs that the product must cover. You then add them together and divide them by the number of products. This is your break-even figure.
  4. Consider Cost-plus Pricing
    Now you know your break-even figure consider adding a margin to this. Knowing the market will help you decide on the percentage markup to consider. This way to price does work on a assumptive basis that all products are sold, so be aware if this does not happen your margins will drop.
  5. Set A Value-based Price
    This is reliant on knowing the market and you determining a price based up[on the market pricing for that specific item.
  6. Think About Other Factors
    There will always be changes that take place. It is important to consider how these might impact you and plan to mitigate accordingly. For example, if VAT changes, how will that impact profit margins, and also if there is any need to writing in terms and conditions within your pricing for breach of contract or late payment.
  7. Stay On Your Toes
    You will need to continually be reviewing and changing your pricing. Your costs, customers’ expectations, and competitors’ prices can vary regularly so it is important to keep an eye out and change to keep in line with the market.

In order to get your price right, you will need to consider these points and how ultimately you want to ensure that you are benefitting from the most important P of all. The price.

 

Read more:
How to price your product or service

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Investing

Post Office collection and cash delivery workers are to stage a one-day strike later this month in a dispute over pay. Members of the...

Investing

UK consumers cut back on credit card borrowing in May amid fears over rising interest rates and a slowing economy driven by a cost...

Investing

The bank said that it was introducing a £1,200-a-year pay increase from August 1, which would start to show in next month’s pay packets....

Investing

Postmasters caught up in the Horizon IT scandal say that they are still being “left in the dark” about a compensation package after the...

Economy

Expenditures for environmental protection declined by 4.6% year on year in 2021, data from the Philippine Statistics Authority (PSA) showed. The statistics agency’s Compendium...

Investing

BT staff have voted for their first national strike in 35 years, which is expected to affect customers across the country having broadband services...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Economy

Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...

Investing

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.