Here are 7 Steps to Perfectly Price Your Product

Posted in How To, Sales, Strategy on May 24th, 2022 | 0 comments

Why Is Pricing Strategy Important?

Pricing is of ultimate importance because every buying decision is based on pricing. We need to put a proper pricing label on our products in such a way it is convincing and appealing as well.

Here are 7 Steps to Perfectly Price Your Product.

The key is to strike a balance that will generate revenue without putting off potential customers. Setting prices too high can make a product prohibitively expensive for your target audience while setting prices too low can threaten your bottom line. Fortunately, there are a number of different pricing strategies that can help you determine the right price for your products. Having a robust pricing strategy gives you a competitive advantage by allowing you to meet consumer demand in a competitive market. Info: Masterclass

Here are 7 steps to price your product.

1. Identify your ideal buyers

What is an ideal customer? – Your ideal customer is someone who gets their exact needs met by what your’e offering. For detailed info visit AudienceOps

2. Perform competitor and market research

Competitive market research centres on finding and measuring key market metrics that help identify differences between your products and services and those of your competitors. For detailed info visit HubSpot

3. Determine your costs

A fundamental principle of pricing is that you need to cover your costs and then factor in a profit.

That means you have to know how much your product costs. You as well need to understand how much you need to mark up the product and how many you need to sell to turn a profit. For detaile info visit Inc

4. Compute your average customer’s Lifetime Value (LTV)

What is Customer Lifetime Value (LTV)? – The customer lifetime value (LTV), also known as lifetime value, is the total revenue. In accounting, the terms sales and a company expects to earn over the lifetime of their relationship with a single customer. For detailed info visit CFI

5. Select the right pricing strategy

If a business cannot identify or arrive at the right price point for their products based on value, it is definitely going to be an uphill battle against their competitors. For detailed info visit Forbes

6. Use the best-fitting pricing model for you

A pricing strategy is the way you set the price.
A pricing model is a kind of price format – it’s part of the way you package and present your goods and services to the customer. For detailed info visit Qualtrics

7. Implement, experiment, and learn

In today’s marketplace, businesses can no longer afford to play it safe. It’s time for pricing to get experimental. For detailed info visit IntelligenceNode

Outcome When You Want to Increase the Price of Your product

Losing out on new clients if you change your rates in relation to your competition.
Loyal clients that have been with you for several years might feel, they deserve to stay at the lower price point.
Fear of increasing the price might put you to remain in the status quo and not do anything about it.

In her Tips for Pricing your Handmade Goods blog on Craftsy, artesian entrepreneur Ashley Martineau suggests this formula:

Cost of supplies + $10 per hour time spent = Price A
Cost of supplies x 3 = Price B
Price A + Price B divided by 2 (to get the average between these two prices) = Price C

For example, you have determined the cost to purchase supplies to make one unit of your product is $4.28 and it takes you a half-hour to complete it, then your formula would look like this:

$4.28 + $5 = $9.28 (Price A)
$4.28 x 3 = $12.84 (Price B)
$9.28 + 12.84 = $22.64
$22.64 / 2 = $11. 32

You also need to calculate the tax for your item:

$11.32 x .06 (sales tax in Michigan) = $0.6792 ($0.68)

So, your starting price (with tax included) would be $12.

While it may need some modification as you find your target market and observe the market for your product, it is a good place to begin when determining your starting price.

How to set a Freemium Price Model?

This freemium pricing model works out fine for most of the products/services. Since the customers get a taste of the features/utility beforehand, they can test if they are comfortable using it. Users also are able to decide whether it is worth the money they are going to pay for.

The New Era of Advanced Pricing Based on Algorithms

Dynamic pricing is establishing prices based on the outputs of algorithms provided by artificial intelligence and machine learning.

It helps maximize revenues and get a competitive advantage by means of utilizing sophisticated instruments like dynamic pricing software. Algorithm-based dynamic pricing is an extremely powerful tool in the right hands. For detailed info visit BBNTimes