Pricing your product is not merely about whipping out a calculator.
Price is a legitimate marketing strategy.
Sure, you need to calculate your pricing so that you don’t make a loss and so that your financial objectives are met, but beyond that, you need to set your price so that it is attractive to your customers and suits the placement of your product in the market.
This week, I have a free downloadable worksheet for you to work out how your price can be a marketing strategy to attract your target market.
How does price do that?
If you’re struggling with your pricing strategy the first thing you need to do is to actually work out your production cost. This can be difficult for people who produce a service – when production is costed by time. In such cases you can work out what each hour of your time is worth or what the industry charges per hour.
Price is a function of a number of things along with monetary cost like uniqueness, the skill you bring, your experience, market demand, marketing objectives. However you need to know what your starting position is, where you can make a profit and reach your financial goals.
Once you have the basis you can decide how the market should see your product. Is it high-end because of the benefits it brings as well as the materials it’s made of, or because of your unique skills or long years of experience? Is it a loss-leader to simply attract people in before you place them into a sales funnel that leads them to buy a premium product?
You can download your free worksheet to formulate your pricing strategy following these steps:
- Consider what your target market perceives as “value.” Is it all about the product or does it include add-ons? Is value all about the dollars? Will they pay more if you can show uniqueness, either in the product, or through your service, skill, experience or other factors?
- Consider what price or price range the market demands? Are there an entire street of suburban accountants all charging the same for a tax return? Is your product common, or if not common does it fit within perceptions of being cheap?
- Under stand your numbers – what price can you sell your product at?
- How does your uniqueness add to any perception of price?
- Analyse all the above and then come up with your pricing strategy – high, low or medium? How does it compare with competition and if different how will you differentiate it in messaging?
- Finally, review your pricing strategy and see if it meets your profit, sales volume and business objectives.
And when you finish, why not come back here and leave a comment on how you went?