No matter how philanthropic you are, the realities of running a business will jolt you into the reality that in business, profits must be made. Besides maximizing resources and some other tips to profit greatly in business, proper pricing is one, if not the biggest deal in maximizing profits.
Pricing involves putting the accurate monetary value on your products or services. Contrary to popular opinion, both extremes of pricing bring on negative effects to the brand or business.
An overpriced good will eventually be bought by the producer and his family while an underpriced good will raise nothing but doubt in the heart of potential buyers. So, it is highly essential to get the pricing right. Here are some factors to consider in pricing your products;
One important thing that determines pricing is the target market, the market segment your product or service caters to. A good understanding of your clients, their pain points, and possible financial situations are getting half of the job done. A “supposed” luxury product that is shabbily priced or produced is definitely on its way to doom.
COST OF PRODUCTION
Next to the target market is factoring in every cost of production. Service-based businesses are more likely to fall into the error of wrong pricing owing to this. The fact that a skill comes easily gives no right to be priced inappropriately. Ensure that the material costs, labour costs, and overhead costs are properly considered before pricing.
Also, weighing the value of your product or service offers concerning the price tag is as important as staying in business. This exercise is one that requires a high level of objectivity which must be acquired at any cost possible.
Business is all about giving and receiving value and that should inform every move. If the value and experience you offer is a far cry from the price tag, it definitely will not do well in the market and if it does by chance, the success is definitely not sustainable.
Studying the market and competition is also very important. Humans are generally products of influences, so is everything associated with serving them. Even in cases where your product or service is the leading voice in the market, having a proper view of the market and possible competition will help inadequate positioning for proper sales.
Furthermore, listening to the customer’s view cannot be overemphasized. After all, they are the ones who will purchase the offerings. Having their opinions about your pricing is highly essential.
Finally, it is good practice to watch the sales behaviour from previous price changes. It is wisdom to put things in proper perspective using the instrumentality of retrospection. Looking back at the customer behaviour from previous price changes can help to make accurate conclusions on price changes.
At the core of every business is satisfying needs and making profits, those two should work hand in hand.