If you are someone that owns a business or creates products, one of the hardest parts of your job will be pricing your products. This is because you want to be able to make a profit and charge for your labor, but you don’t want to overcharge and get no customers. Deciding what to price your products can sometimes also be discouraging, because you may be charging a price that works for your customers, but you feel like you should be making more for your product. It’s a difficult subject to tackle and people often avoid having to deal with it by having an external company price their products, but not everywhere offers this service.
However, worry not as we have learned all the best tips and tricks for giving products reasonable prices. We have scoured the internet to get a professional opinion on how you should be addressing the matter of pricing your products and how this will add up against your cost margin. Here is all you need to know about the secret art of pricing your products.
Keep a full receipt of costs
Before you even start to price all of your products, the first thing you should do is keep a receipt of all of the costs that go into making the product. This means the general costs for materials, such as wood or paper- whatever you use. This is important as it means you have a minimum that you can work up from. If you don’t keep track of these costs, then you may find yourself in a position where you are actually losing profit. As well as material costs, you should also take into account the costs that it takes to run your facilities.
If you are renting an area to sell and make your products, then you will have more outgoing costs. You will also have to deal with things such as electricity, gas, and the cost of your tools. You want to keep this in mind when you are pricing your product, as you may make enough to cover initial costs but find yourself falling behind with other costs that you have to cover. You should work out these costs and then work out how many units of your products you would have to sell to cover the baseline of these costs, from there you can work out how much money you will need to actually start making a profit for yourself.
Another way to ensure that you are giving your products the right price is through market research. This means looking at similar products that are currently on the market and checking how much they are being sold for. You don’t want your product to be vastly more expensive than others on the market, as your consumers will just pick that product over your own. When researching this, if possible, you should also look at how many people are buying other products online. If you look at sites such as Amazon or eBay, there should be an analytic section that informs you of this. If lots of people are buying that product for that price, then that shows that people are comfortable with that price point and don’t mind purchasing it at that cost.
You can also look in the review sections of most selling sites and most customers will leave a review, lots of which discuss whether or not the price that they have paid is worth it for the product that they have received from the distributor.
If you already have a price point in mind, you can also look up other products that are sold at that price point and see if your product fits in with the list. You can do a quick google search of something like ‘die besten Kleine geschenke bis 5 euro für kinder’ and take a look at what products pop up. This may make you think that your product is of better quality than most of those products and deserve a higher cost, or you may even think the opposite.
Ask your customer
Ultimately there is only one person’s opinion that matters and that is the consumer. Because of this, it would be stupid to not ask them for their opinion on pricing. A lot of the time, consumers will be extremely honest, however, they will obviously try to get the product as cheap as possible. Because of this, instead of allowing them to say whatever price they like, it is a good idea to give them three price point options that you feel comfortable with too. This will mean that they aren’t giving you an unrealistic price, but you are still getting your potential customer’s opinion on how much they will be willing to pay.
Check out your local area
If you are someone that will be distributed from an in-person shop as opposed to online, the best thing you can do is take a look at the pricing in the shop of your competitors. Even if they don’t sell products similar to your own, each area will have a general cost level that customers go to expecting to pay. If your prices exceed the prices of shops around you, then you are likely to miss out on potential customers. You can also ask for the advice of local shop owners.