How to price?

My Dad used to have a few sayings regarding price, the first involved the differences around what something was worth and what it cost. What this instilled in me was that the price of something was different depending who the customer was. The second was that people never appreciate something they get for free, so don’t give anything away but price appropriately.

A carefully considered pricing strategy is vital to optimising both sales volume and profit. Price is one of the most important ways in which customers choose between different products and services, and knowing the optimum price that you should charge to maximise sales and profits is key to beating the competition.

When determining a price you need to ask yourself what are the associated costs of making and providing your offer and then work out what someone would like to pay? 

Determining the base cost or the cost to produce your product/ service is the starting point for determining your price. You need to calculate the total costs to produce, market and distribute and then work out the baseline cost to be covered to break even. Then you will need to work out how much extra you will add on to make a profit.

There are a lot of things to consider when pricing your product/ service including: 

• The type of product and service you are manufacturing, is it common or rare?

• The level of competition

• The market that you are selling in

• The level of supply and demand for your offer

• The costs associated with producing your offer

• How you will sell or market your offer

• How customers access and pay for your product

• Is there ongoing costs or an after sales component

• How your branding/ offer is perceived

Within the guides we’ll go into a lot more detail around how to develop your pricing but hopefully this helps you get started.