Setting the Price of your Product or Service
by Ron Kurtus (13 April 2010)
Before setting the price of your product of service, you need to define your product and know who your competition is. At that point, you can research what your competitors are charging for similar goods, as well as to see the supply and demand, in order to establish your price. Depending on your niche and selling price, you can determine an advertising strategy.
Questions you may have include:
- How do you examine your competition's prices?
- How do you determine your price?
- When do you advertise your price?
This lesson will answer those questions.
Look at the competition
During the Definition Phase of marketing, you determine your goals and plan of action, as well as list your potential competitors.
Then, during the Preparation Phase, you determine the product of service that you plan to offer. At this point, you can then research your competition to see what they are charging for similar goods. This can give you a price range to consider.
Determine your price
You then define the niche for your product or service. The research done on the competition can give you ideas about where you would have an advantage in pricing your goods.
You might want to offer your goods at a lower price than your competitors. Or perhaps, you see an advantage of appealing to high-end buyers with your pricing. Of course, your product features and cost to product also have much to do in your pricing.
Advertise your price
Once you have established your price, you can promote your product or service in an appropriate venue.
If you are using a low price as a selling point, that fact can be used in your advertising. If you are selling a luxury item, the customers usually are not too concerned with price. In fact, they often prefer to purchase higher priced items as status symbols.
Before setting the price, you define your product and know who your competition is. Then research what your competitors are charging for similar goods and establish your price. Depending on your niche and selling price, you can determine an advertising strategy.
Make sure the price is right
Resources and references
The following are some resources on this topic.
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Setting the Price of Your Product or Service