How to price your products and services - Deepstash
How to price your products and services

How to price your products and services

Pricing is something we all do, but we don’t think about it very much.

Most startups focus on having the right product before finding the right pricing strategy for their business. That might be the wrong order.

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MORE IDEAS FROM How to Win in Business With the Right Pricing Strategy

Focus on the Pricing Strategy, not the Product

A business can’t succeed by selling below cost, nor can it succeed in the long run by only charging the going rate. Think about what your business does and how much value it really creates for its customers, and you’ll develop a pricing strategy that not only works well in the present but ensures you stay successful in the future

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What’s the best price to charge for your products or services?

 It depends on what your customers can afford, what they think they should pay, and what you think they’ll pay. The actual price is somewhere between these three variables.

Pricing is one of the most important decisions in business. It can make or break a company. And yet hardly anyone knows how to do it well. Most companies, when asked how they know what price to charge for their product, will either say “We looked at our competitors”, or “We looked at what the market would bear.” If that’s all you know, then I’m sorry to tell you that you’re guaranteed to lose.

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Be intentional about your pricing decisions

Pricing is one of the most important aspects of doing business. It is often the most difficult. Proper pricing is the difference between success and failure, between profit and loss. No matter what kind of company you’re trying to create, you will need to know how to price your product or service properly to succeed.

One problem I find people pay less attention to is the effect their pricing makes on their overall business well being. I see a lot of accidental pricing with the hope that luck will shine on them.

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RELATED IDEA

Good Pricing Strategy.

Pricing strategy helps you determine the price point at which you can maximize profits on sales of your products or services. Factors to be considered includes:

Costs: Overheads, production and distribution.

Competitors: Offerings and positioning strategies.

Customer: Target customer profile.

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Understand your costs

There’s no need to go into this too much as for any business owner, this is 101 - but it is always the foundation of getting your pricing strategy right. Ensure you understand how much your product has cost to develop, how much it will cost to deliver and how that cost will scale as more clients come on board (more servers, more support staff etc).

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Setting the right prices for your products

This is a balancing act. A low price isn’t always ideal, as the product might see a healthy stream of sales without turning any profit. Similarly, when a product has a high price, a retailer may see fewer sales and “price out” more budget-conscious customers, losing market positioning.

Ultimately, every small business will have to do its homework. Retailers have to consider factors like cost of production, consumer trends, revenue goals, and competitor pricing. Even then, setting a price for a product isn’t just pure math (numbers behave in a logical way; humans, not so much).

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