6 Things to Consider When Pricing Products
Pricing is scary. Products and service costs have the power to greatly influence your audience and determine their exposure to your brand. It’s often one of the first things your customers notice about your business and determines their next move at a pivotal spot – the point of sale.
Price something too high and it will alienate certain customers. Price your products too low and you are at risk of not turning a profit at all, which can cause a domino effect and lead to a disastrous end.
While pricing is often an afterthought and a final step in creating a business, it should not be taken lightly. There are many factors to consider when pricing products or services – some obvious and some not.
What does selling the product cost your business? This is the most important factor in determining the price for the end user of a product or service. If you’re selling a unit of lotion, the cost may be as simple as what you buy the product for plus your upcharge. For a service, it gets a bit more complicated when adding equipment, labor, expertise, product use, etc. Whatever the case, you need to determine the cost of the product or service that comes out of your pocket. This will serve as a baseline for future price considerations.
There are many different methods to determine pricing. From cost-plus to value-based to competitive pricing, each product category can require a different pricing strategy. Take some time to research industry trends, product types, and pricing methods to determine which is right for you.
What is the current market like for your product? This could be a local consideration or an online search depending on where people purchase your items. Monitoring the market is essential, but also needs to be taken with a grain of salt. Use this information in tandem with your pricing strategy. You want to price your product true to your brand but also be aware if a significantly better or worse deal is out on the market.
Having a well developed customer persona helps determine price. What can your client afford? Are they sensitive to price changes? Are they motivated by discounts? These types of questions allow you to fully understand the motivations of your customers and price a product or service accordingly. You must know who you’re selling to.
Price plays a major part in perception. Often highly priced products are seen as higher end. While products that can be purchased at a discount or lower price point are seen as economical or “a deal.” Whichever strategy you choose, it must be in line with the image you want to send to customers.
Analyze your favorite products, their price, and how you feel about them. Do you feel excitement when you splurge on an expensive face cream? Do you congratulate yourself when you find a great deal at the discount store? These purchases serve distinct purposes and further solidify how you feel about a brand.
Pricing is just as much a marketing strategy as your monthly ad in the paper. We’ve discussed how influential it is in determining purchase power so pricing must work in tandem with your other marketing efforts.
If you’re running discounts does this pair well with a higher initial cost or lower? If you host events, are clients likely to make additional product purchases at the same time? Are your prices a major selling point? If so, how can you work this into advertising? Your website?
Selling your product at the ideal price is a careful balance. It’s important to choose a price that speaks to both your product and your audience while still maintaining proper revenue.
Digital Limelight Media has over a decade of experience in the aesthetics, ecommerce, and medical marketing industry and can ensure your pricing methodology is a seamless part of your marketing strategy. If you’re interested in elevating your products as part of a seamless brand, website, strategy, and more, we’d love to chat.