Product Pricing

How to price your product and service is a critical element in your marketing mix - but how do you go about setting the price?

Price conveys something about your business. Price higher than your competitors and have something over and above what they are doing and your overall product offering could appear better.

Price too high with no added value over your competitors and you're come across as just plain expensive.

Price too low and you'll just appear cheap and people will think twice about buying from you

Pricing for profit

When you price your product or service you need to see what your competitors are charging first.

Then determine if your offer is better or worse. You could still charge the same but offer something extra to gain market share. Do you want your brand to be perceived better than your competitors as a premium brand?

Once you have decided where you want to position yourself in the market you can set your price.

Cover your costs

You must price according to the market FIRST. Never do cost plus pricing. Of course you need to make profit so need to understand your costs. Your margin may be thin and you may think it's not enough to make the profits you want.

Therefore you'll either need to a) sell more or b) trim your costs to achieve your profit objectives.

When customers ask "how much"

We have all been in this situation when people just ask "how much" and know nothing about your product. How they can make a decision based just on price is how things are moving these days but most consumers have a few base requirements at the back of their mind they may see as pre-requisites that they are just not telling you about.

Before offering a price offer some key benefits about what they will receive before you reveal the price - classic sales pitching.

Learn more - share your views

We have been having some interesting discussions on pricing in our forums.

What's your best marketing tip

How do you set your price

Thanks for your input - please use the forums to share your knowledge and ask questions.

If you have any questions or comments then please visit our Business Forum

All the best for a successful business,

Peter Hale

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