Set your price point too high, people will stop buying. Set your price point too low, see your profit margins slip. Setting ideal price points for your brand’s products or services is the foundation of how your business’ money flow. Coming up with a pricing strategy that works for you, as well as your customer, all reflects on your businesses budgets and goals. Read on for four important tips when it comes to pricing your businesses’ products or services.
“People do not buy goods and services. They buy relations, stories, and magic.” -Seth Godin
Know Your Brand’s Worth
1. Know your industry/audience
Be an expert in your industry by being aware of the demand for your product or service and how much consumers are willing to spend. Knowing your market is important because it gives you an idea of how much your competitors are charging as well as what your customers are expected from your specific brand. Set your price points accordingly.
2. Calculate your COGS (Cost of Goods Sold)
There’s a lot to consider when producing a product for the masses; materials, manufacturing, insurance, rent, transportation, marketing, digital marketing, and the list goes on. Once you’ve figured out how much it costs to make your product/service, factor this into your price points. This tip is key when it comes to coming up with a price tag for your brand because you’ll either make no profit, break even, or exceed your sales goals (Which is what we want!) Remember, be smart with your calculations and numbers!
3. Know your product/service value
Communicate the value to your customer by how much you’ve spent into your product or service and be realistic! Think of the quality of the packaging and materials you’ve spent. Is your brand/service high end, affordable, or in between? For example, if a burger joint has high-quality ingredients like locally grown sources and organically grass-fed meats, then they can raise their price per burger higher than the typical fast-food restaurant.
4. Monitor and test when possible
Analyze the data of your sales and listen to your consumers. Listening to your customers is important because they are what drives your traffic and sales. Think about surveys and experiment with that data to adjust your prices correspondingly.