PRICING: WHAT IS YOUR PRODUCT WORTH?

Choosing the right price for your product or service can be one of the most difficult, and important decisions, you make as a business owner. After using your best sales techniques showing off all the attributes of your product you inevitably get to that point where your customer asks “How much?” 

Often this is your only chance to close the deal, but if the price is too high the customer walks away thinking they can’t afford it at this time.  It is very difficult at this point to suddenly create a discounted price.  On the other hand if your price is too low the quality of the product is cheapened and the customer thinks it might not really be worth it.  Also a low price might cut into your profit margins.  Unfortunately, there’s no guaranteed way to ensure you’ve chosen the right suggested price. However, the following rules of thumb may help you in setting a realistic price.

Research Your Market – find out what similar products in your market are selling for so you can see the normal range of pricing for that type of product.  If your price is higher than the average make sure to have a reason why and be able to explain it to your customer.  If you price your product lower because you really need to make the sale make sure that your customer knows that it is specially priced or on sale.

Base The Price On Value - Don’t be afraid to suggest a higher price for your product, as long as you’re delivering serious value to buyers. If you save a customer thousands of dollars or solve a significant problem for them, it could be worth it for them to pay $50 or more for your product. The important thing is being able to effectively convince them of the true value of your product when you pitch it.

Experiment With Pricing – If you have multiple versions of your product you can test out different prices and see at which price your product sells best. Never assume your prices have to be low to improve sales. Sometimes a higher price can make your product seem more valuable to customers.  The important thing is to regularly make changes in the price and test them, so you can find the most effective price for your product.

Don’t Price Your Product Too Low - Although it can be tempting to suggest a very low price for your product, this can have a downside. It implicates that your product is of lower quality.  If this is not the market you want to be in you should maintain the pricing for that market.  In the long run you will be attracting customers that appreciate your product and are willing to pay for it.

Don’t Price Your Product Too High – A high price can scare off potential customers.  It is important to establish your product’s reputation and its high quality before you ask a price that is in the high end of your market.  Establish the value of your product.  Also, high-priced products may also lead to more refunds, if customers feel your product hasn’t delivered enough value to make it worth the high price.

Make Sure To Include Yourself In The Pricing Equation – Remember that your time and intellectual property are worth something too.  If a product requires a lot of your personal time figure this into your hourly rate into the price.  If you are providing a service make sure you have a good idea of how long the project will take you to complete and make sure you give a realistic price based on this.

Experimenting with differently priced versions of your product can be a great way to find the “sweet spot” for maximum profitability.  Let's hear from you...how do you price your products???