buraka.tv Price Story - Product Pricing Come from the Specifications of the Product and Potential Customers

Some sellers and businessmen may still find it difficult to determine the product’s price. Undeniably, the prices are closely related to the sales and profits. This is often confusing in which they are afraid of losing customers when the price is too high.

Companies have to deal with product pricing before launching a new product. Luckily, business owners can use many types of pricing strategies. The idea of using the pricing methods is to gain a higher profit margin. Here, we have several essential factors to earn a higher profit margin.

On the other hand, when it is too low, they may be suffered from being lost. There are indeed some important factors in determining the product prices. What are they?

A. Customers

Your priority is the customers for sure. So, the price offered must be accepted by your customers. Therefore it is important to learn more about the customers as your marketing targets.

Who are they? 

How is their income?

And there are still many others. In other words, the price to be determined must be able to reach by them. They can just be back to you later when you can determine it well.

Who Will Buy Your New Product

The important factor when you are determining the product pricing strategy is who will buy your product. It means you have to clarify the customers of the product. It is an essential factor in setting the best product pricing. You can decide whether the customers buy the product because of the price or the quality by understanding their characters. It is better to hire a market research agency for a better research process and a more accurate result.  

B. Competitors

It is necessary also to see the price offered by the competitors. Make sure that your products are able to compete well in the market.

If it is possible, the price should be a little bit lower when they have the same quality.

What Market Position the Product Is

Make a market position for the product. It can be the most expensive, most luxurious, high-end brand, cheapest, and many more. The market position creates a perception in the eyes of potential customers. 

C. Cost

This is actually the most important factor but for some reasons, it is on the third place hereafter the customers and competitors. After all the production costs are calculated, it is the time to determine the product’s price.

Of course, by considering the two other factors mentioned above, you should also put some efforts how to press the production cost without reducing the quality.

How Much Money You Spend To Produce the Product

Now, start to calculate the total production cost to produce a new product until it launches to customers. Try to classify the production cost into fixed cost and variable cost. Fixed cost is the cost that you always expend to produce the product. The costs that include the fixed cost are rent, electricity, salaries for the employees, materials, and many more. Variable cost is the additional cost. Let say you need additional materials that are not available on the main materials. Put the cost of the additional materials on the variable cost. Calculate the fixed cost and variable cost to determine the production cost. You must set a higher price than the production cost to earn a profit. Find out the cost of similar products in the market and compare it with your product to get the best product pricing. 

D. Benefits

In the beginning, the main purpose of establishing a business is to gain the benefits. So, this one must also be one of the considerations to take. When your business is still new, don’t you dare to set too much profit?

Being reasonable is the key point here.

Why You Launch the Product

You must have a reason why you launch a new product. Business owners may release a new product because they want to get a maximal profit. Other owners introduce a new product to increases market share maximally. Let say you want to earn a maximal profit from the current item. It means you have to add more values to your product. The more benefits you give to the goods, the more customers will buy it no matter the price. If you want to gain market share, you can try to promote a new product at an affordable price. It will be better to combine the best product pricing strategy with the ability to sell for a maximal result. Just make sure that you don’t make poor pricing decisions.

What Are the Product Values

It is better to produce a product that can help to solve the problem of your potential customers. It means that the product has value.