Pricing your product right isn’t an easy task. Your budget, goals, and what the customer wants are all important points to take into consideration. Here are three questions you should ask yourself when you are deciding prices.
- What is your operating budget?
Once you have your budget in place, try out different scenarios. Decide whether you will charge more and sell fewer products, or lower the price and have more to sell. Keep in mind you need to know how much you have to sell to keep your business a float. Find out what works best for your business as far as profit on each sale.
- What are your business goals?
Low prices will work if you are trying to build market shares quickly. Be cautious starting at a low price if you plan to gradually raise the price in the future, unless you are adding value or benefits to your product.
- What does the customer want?
It is always important to take into consideration what your customer wants when it comes to pricing your product. If your price is too low customers may think it is cheap, where as if you price it too high they may not see the value. Try to find the happy median.
Keep in mind the price of your product can always be adjusted over time, just make sure you will still break even to keep your lights on.