It goes without saying that pricing products you sell would determine how long you would last in the online market. Especially, if there are lots of competitors in your niche. This speaks volumes of the fact that you need to really understand the market perfectly. So your pricing resonates well with your customers.
How do you make your prices an irresistible offer which puts your competitors at their toes? And how do you review the prices of your competitors to your advantage?
A good rule of thumb is basically to understand your customer base
Are they entrepreneurs or have a day job?
What’s their age group?
Are they students or stay-at-home moms?
You can now give an estimation of how much they would be more than willing to pay. I mean, without any hesitation. This would definitely go a long way in ensuring that you’re making a profit when pricing products you sell.
There are several methods you can implement on pricing products you sell. In particular, that’s what I’m going to be showing you how to do in this post in a step by step fashion.
First, you need to understand the cost of producing your products. In addition, be aware of the expectations of your customers (what they expect you to give them). Furthermore, consider other factors in your niche.
What is cost when pricing products you sell?
Simply put, cost is the total amount of money you spend in making a product you intend to sell. For example, the cost of machineries, tools, ingredients, transportation, delivery… the list goes on and on.
Price, on the other hand, is the amount your customers have to pay to get your product or service. In other words, for you to make profit, ensure that you’re pricing products you sell higher than the amount that you used in producing them.
If you don’t follow this rule, you would be running your business at a loss. Thus, you won’t stay long in the business because that’s a recipe for bankruptcy.
Keep in mind there are exceptions
You might adopt the strategy of pricing products you sell at a lower price than your competitors. This could be helpful in order to gain customers, build awareness, and gain entry into a market space when you’re new.
But change once you’ve achieved gaining traction and have a reasonable amount of customers. At that point, you can now review the pricing of products by gradually increasing them.
But do you know the amount your customers would be willing to pay without any hesitation? This is determined by how they value your product to solve their problem, end their worries, or answer their questions.
Obviously, your marketing strategy, uniqueness, and reputation will also play a significant role in guiding you on the best technique to use in pricing products you sell.
With this, you can now understand that your cost of producing a product and the price that your customers are willing to pay works hand-in-hand in determining pricing products you sell.
This is very critical if you price your products way higher than what your customers are willing to pay. As a result, you would not get sales. Not because your product is not a good one but because your customers basically can’t afford it.
So, keep in mind that a high or low price of your product can dramatically influence your sales volume. Also, your customer base.
Four factors that influence business decisions in a market
The availability of substitute products.
Your customer base.
Also, positioning yourself in a way that you’re perceived as an expert in your niche by your customers. This is also another consideration. When you are pricing products you sell way too low your customers may perceive that your products have low quality. This approach will demean your business in general.
Conversely, you might put a high price (without careful evaluation and estimation) on your products. This will most definitely chase away customers to go to your competitors’ products that are priced lower than yours.
So, you need a pricing strategy to adopt when pricing products you sell. Here are some considerations you need to make:
Spying on your competitors prices religiously and keeping your prices similar to theirs is one of the best strategies to adopt when pricing products you sell for your business. This goes without saying. Also, you need to keep yourself abreast with what your competitors are doing.
Overall, you want to have first-hand information on what pricing strategy you need to implement. A good rule of thumb is to price your products similar or a little lower than your competitors. It will attract customers to your products.
Cost plus mark-up when pricing products you sell
This strategy is the complete opposite of the first strategy above. It aims at pricing products as you wish in order to increase your profit margin quickly. While this is an advantage for your profit margin, it may adversely affect your business in some circumstances. So, it’s important to be sure before taking this pricing decision.
Selling at a loss for gain
This strategy involves pricing products you sell at a ridiculously cheap price. The intention is to entice customers to buy your products on a large scale. This is often a good strategy when you’re just new in a market. At any rate, you want to win the hearts of customers and make your mark against other competitors.
Pricing products you sell at a close out
This strategy is similar to the one above. It involves you pricing products that you sell at a cheap rate. Besides, you want to clear your stocks to prevent losses from your end.
Membership or trade discounting
This pricing method involves you selecting some loyal customers that usually buy lots of your products or service. You offer them discounts, coupons, and special offers just to show appreciation for buying your products.
This goes a long way in telling the customers that you value their patronage. Given that, they would likely return the gesture by spreading word about your business to others.
Bundling and quantity discounts
This strategy is similar to the one above. It involves offering a reasonable amount of discount to a selected number of customers who make bulk purchases on your products on a regular basis.
Offering other versions when pricing products you sell
This method involves you putting different versions of a particular product for sale. But offering lower prices for the more basic ones. The aim is driving sales to the more expensive ones as well.
In other words, customers who are high paying consumers would definitely see that as an incentive. It will boost the sales of your products and services.
With these strategies laid out for you, start implementing them in your business. You can drive your products sales to the next level you’ve always dreamed of when pricing products you sell.