How to price your product
A guide to price your product to ensure an ideal balance customer satisfaction and profitability
Pricing your products optimally is of utmost importance not only because it determines your overall profit
, but also because it lays the groundwork for a successful business model. By following the steps given below, you can price your product to ensure an ideal balance of profitability and customer satisfaction.
Determine your costs and overhead expenses:
When running a business, you should estimate the overhead costs and also all the little expenses you may incur. These expenses include direct expenses like labour, marketing, manufacturing costs and indirect expenses like operational costs and personal expenses. After you have an approximate measure of your expenditures, draw up a pricing strategy that might be beneficial for you and helps you attract more customers.
Understand your customers:
In a country like India, there is a demand for products spanning the entire range of the pricing spectrum. For example, a high end watch which is extremely costly may not be bought by people with medium to low-level incomes. Determine whom you are catering to. Once you know your audience, it gets easier to price your products for that group of customers.
Perform exhaustive competitor pricing analysis:
As with any business strategy, you need to do sufficient market analysis before pricing your products. It is important to monitor your competitors’ pricing behaviour because it will give you an edge over them. By providing the customers better price for the same product, you might gain their loyalty in the long run.
Fine tune your prices based on market fluctuations:
There are many things that directly affect the market pricing of a product. This can be anything from stock market fluctuations to a new model of the same product being launched. Whatever the reason, it always helps to be in step with the market you sell on. Too high a price might make you lose customers and too low a price can have disastrous impact on your business in the long run. Basically, adjust the price of your products in a way that can be profitable for both you and your customers by taking the market trends into consideration.
Take advantage of seasonal/sale discounts:
Seasonal sales are one of the best ways to attract more customers into your online store front. Due to the large number of customers during sale events
, you can provide discounts and price your products slightly lower than usual. Since high volume of sales happen, it will not just help you push out the slow moving products, but also help you gain more customers in the future.
Running a successful business venture requires strategic planning and a good pricing strategy is one among them. There are tools that help you set the price of your products on a regular basis. Amazon’s Automated Pricing Tool is a tool designed especially for its online sellers. By fixing the maximum and minimum limit, you can set the parameters for the lowest market price or buy box price. Additionally, it also lets you assess historical prices of your listings. To use this tool, you need to be registered as a seller on Amazon. Click here to register as a seller
and begin your Amazon journey, today!