There are a lot of things to consider for pricing items or services, for instance, the worthy competitors’ prices, the feasibility for your business in the long run, and the consumers’ willingness to pay for your item or service. Well if you think about it, you really don’t want to lose money on items not sold (these are the stocks that gather dust on the shelves) which have no chance of really being sold.
So when it comes to pricing, you should keep all these in mind. Also, selling more at a low price doesn’t necessarily mean you’re doing well profit-wise. I read an article that said otherwise, and the businessman ended up only breaking even. You wouldn’t want that would you? After all the effort you end up where you were at the very start. What’s the point of your business then? Certain schemes on the Internet promise you tips on how to effectively list and appraise your stuff, with more of them turning up to be scams and other whatnot.
There are theories in economics which delve into the phenomenon that is pricing. Consulting economics books would definitely help you in this endeavor. With concepts that include effective marketing strategies, estimation of the demand curve, elasticity, and environmental costs, you wouldn’t go wrong. This article is just a simple guide which would hopefully enlighten you in the said topic.
There are at least a dozen different approaches in right item or service pricing (to sky rocket profits and expand your business), and the following are some of them:
The first approach in order to get the price right involves a lot of research. You should consult your audience or customers for they are the end users of your products or services. In a way, it could be considered as a feasibility study. Now doing this would take a little time, as surveys need ample polishing and data processing, but the rewards would be golden for the results would explain what you really need to do. This method is very advisable for business starters.
The second approach also involves a little research as you will be comparing your competitions’ prices with each other, ending up with alternate prices. The method may be sneaky to some, but it is effective. It’s less stressful than the first approach, as this would only involve a little investigation on your part. Enjoy your competitors’ coffee or bagels while you’re at it, or let your friends or employees scout their prices for you to save face.
The third approach involves self-appraising your products. You are in charge of how much you really want the item or service to sell. A massage? Homemade cookies? You set the price. Just take a good look at your goods and figure out how valuable the items or your services are, and make sure you price them fairly. Taking a look at the demand in the market would also give you an idea on how to reasonably appraise your items or service, with higher demand fetching a higher price and a lower demand fetching a lower price.
Basically, the best pricing strategy would earn the business a lot of money after meeting all the costs, which are the other expenses in the said business. An article I stumbled upon gave me a clearer image of the situation that the price of each item or service should include the expenses related to it just to get the expenses out of the way. This really makes sense if you think about it. Now who would want to charge less than what he spent for in the first place? Now that would be a no-brainer. Of course you would want the raw materials and labor for the product to be compensated. Add a little more to this and then you’ll be making your profit.