What should I consider when pricing my product?
I know that I need to at least make back what it costs to make, but how do I know how big of a markup I should take? Will it be different if I sell my books on my website vs in a store like Amazon or Barnes n Noble?
Use a process like Real Estate agents do when doing an analysis on home values. They look at all the homes in an area and then determine one by one, is their house better or worse than another. Your house must sell for than homes that are better, but more than homes which are worse. Eventually you come up with a happy medium. Example, if your product was a treadmill, I'd look at 20 different treadmills and there prices, side by side. Then find out which one are closest to yours, and then one by one ask your self 'is my product better or worse then this one?" If yours is better. then you should be able to get more money. When you see your product is inferior you should expect to get less. Find the middle point. Bottom line, if the marketing is there and you're not selling. you probably overpriced yourself. I hope that helped.
Things to consider when pricing a product
Whether you are starting out or starting over, here are five factors to consider when pricing your products and services.
Costs. First and foremost you need to be financially informed. ...
Customers. Know what your customers want from your products and services. ...
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Chances are, you have a unique product, at least in some way. However, that said, you'll also likely have competition to compete with who make similar products or offer similar services.
The more unique the product/service, the easier it is to put it into its own price category. For example, if it's a handblown pendulum light, it's so unique (one of a kind!), you can price it as you wish. However, if you graphic design services or website design, there will be similar businesses in your league. What can you do to create your OWN unique brand? What twist can you spin, using your traits, gifts, talents, on your brand to put it further or completely into its own league? The more unique your product, the more flexibility you have in terms of pricing choice.
Most importantly, know your worth! If, for instance, it's a product you created yourself, it's imperative, when pricing your product or service, to feel equality between the "giver" (seller) and "receiver" (buyer). If you don't think you're charging your worth or value, you'll keep attracting a lack of abundance because your customer will "feel" that sense of "unworthiness", too. Your customer has to feel as though what you're offering is worth the "price tag."
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You should know the purchasing capacity of the people who are going to become your customers, If you have priced your product without knowing your customers' purchasing capacity then it will not be a good thing for your business. To know this you can do a little survey in your area with product detail. You can ask the people directly by word of mouth, It will make a good impact on your customers.
I think you must take care in mind the total worth of the product plus the expenditure you've made on the product individually. Also, you need to take care that the price should be reasonable enough to reach the targeted audience.
I think the first thing you need to do is to do a market research. Find the existing book in the market, whose content related to yours and think about your targeted audience. I hope that this thing will be helpful in pricing your product.
Before you set your pricing, work out the costs involved with running your business. These include your fixed costs and your direct costs.
Know what your customers want from your products and services.
Where do you want to be in the marketplace? Do you want to be the most expensive, luxurious, high-end brand in your industry, the cheapest, beat it by 10% brand or somewhere in the middle?
What are they charging for different products and services? What inclusions and level of service are they offering for those prices? What customers are they attracting with their pricing? And how are they positioned in the marketplace?
How much profit do I want to make?
Hope this help!
How I do it, is my clients pay via bank transfer, the contract states due and payable in advance of the monthly services. My contracts also state I own all creative, content, copyrights, et all, until the term of the contracts expires and is paid in full.
If they don't pay, I require everything to be deleted in violation of the above terms.
I recommend pricing from the top down, instead of the bottom up. The old-fashioned bottoms-up method uses the cost of goods as the starting point, add expenses and overhead and then profit.
Instead use the top down, get the maximum price possible, based on your offerings and your industry, then subtract costs and you end up with a profit margin.
Do not be afraid to charge appropriately. You can also have sales and give discounts to lower buying resistance - but you will have established the "value" of your product by publishing the higher list price.
Everyone likes to think they are getting a "good deal".
All your questions can only be answered after analyzing the industry you are positioned and the way your competitors target. Get a list of top 10 competitors in your industry and do a comprehensive research on their pricing. Set pricing at a nominal range and make sure to provide some added value when compared to your competitors.
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1. Competition pricing
2. How many people will pay for it
Will it be different if I sell my books on my website vs in a store like Amazon or Barnes and Noble? It depends on you. Usually, people sell at the same price. But there are few that sell for less on their website because it will increase the reliability of the person and more people will visit his site in that case.
When selling products online in an e-commerce or so-called webshop you should keep the following in mind:
First of all, your costs need to be covered
1. Make sure all indirect and direct costs are covered.
2. Be aware of hidden costs: Shipping, taxations, duties etc. Ensure you don't forget any of them.
3. One often also forgotten: Your own salary. There are so many companies in this world where the owner does not count himself as a paid employee.
I am not saying you can't sell anything below the total cost price per product. Often to be able to compete you lower the prices on certain products and use cross sales you balance it again. Still, you need weekly insights about how your costs are developing so you have a baseline to set prices.
What does the market say? Want do the customers want to pay for it.
1. Check the pricing of your competitors. Make sure you get the right picture. For example. Some competitors look cheap but add a so-called administration fee at the end or ask a higher than average amount for shipping or using a certain payment gateway.
2. Learn more about you customers. Who are they? What do they earn? What do they spend? How do they spend it? Bases on this you setup you pricing technique. For example high price, low price, high price with discount, low price with upselling. You need to know how to setup the "trap".
3. Different customer, different price. Coupons are your best buddy. You can do A/B testing or create awareness. Also, you can make your products look cheaper than they really are?
4. Ensure pricing is in sync with the appearance of your brand of web shop. Targeting the big spenders then don't build a website that looks like a basic supermarket and don't lower your prices too much. Some people on this world only spend big!
Pricing and presentation should definitely need to be adjusted if possible, based on where you will be selling your products. When a customer purchases a book or product from Amazon, or Barnes and Noble, they are a customer of that platform. Customers have already come to expect the type of packaging, presentation and shipping speeds from these platforms, but when a new customer is purchasing directly from your website, you'll need to put in a bit of work to impress. You should probably include some goodies, or put your book into a custom branded gift box, which may increase your costs, but at least you won't be paying any additional seller fees for each sale. Like many other answers in this thread, make sure you include at least a 40%-60% margin so you can afford to discount your products once in a while!
The bigger question is differentiation, rather than pricing. With potentially thousands of other websites selling similar items online and probably cheaper, it's easy to get caught up in a race to the bottom. Offering the lowest price is only going to set you apart until your competitor lowers their price to match yours, then with no other compelling reason to stay, your customers will bolt. Instead of competing on price, look for ways to establish a close personal and emotional connection with your customers, open up meaningful two-way dialog, and give them a compelling reason to keep buying from you, even if your prices are a little higher than the other guy.
1. Marketing and sales expenses.
2. Value proposition. How would the market perceive the value of your product.
3. Price of nearest competitor.
4. Yes, Selling on Amazon, etc, is different from your own website, unless you have created a specific brand for yourself already, and your brand is well promoted and sucessful.
1. Ensure that you cover all your production and selling costs by applying Absorption Costing or ABC method.
1.1. Only for marginally additional units, you may use Marginal Costing method too.
2. If you're operating in a competitive market, (contrary to popular misconception) you lower your price to undercut competition and yet increase total Revenue.
You need to consider all the costs that do towards making your product. Don't forget that's not just the cost of the raw materials but also any consumables like electricity, rent, etc which should be apportioned across all products as a fractional cost. You then need to consider what you should pay yourself. This is more difficult but, if you can't make enough money to live on why are you doing it in the first place? The other key consideration is the market. What is the going rate for what you sell? If you are selling something that can be purchased elsewhere you will have to be competitive or people may choose a cheaper alternative. If, however, you are selling something unique and desirable you may be able to charge a premium. Don't forget that you can always change your prices later (although its easier to reduce a higher price than raise a lower one). With regards to marketplaces like Amazon they will undoubtedly charge you a commission. You would need to speak to them about what that is. This is also true is you want to sell in a retail store (commissions here can be anything between 25% and 50% of the selling price). If selling in stores you could look to differentiate your pricing. E.g. a store in an affluent area may be able to charge a premium for products. If you already have a website you need to look at the overheads of running it versus selling through a marketplace. You have to spend time creating and updating content, marketing and fulfilling orders. With a marketplace it depends whether you just sell your products to them and they do the rest or you still have to fulfil orders. And don't forget returns!
The only answer is the market price! At what price point are your customers ready to buy? So you have to know your customers inside out as well as your competition. Then pricing is also an element of your positioning! I hope this helps.