Your price is right when your customer buys your offer. The price is somewhere between the lowest price you are willing to accept and the highest price your customer is willing to pay for it.
Getting to that price is a combination of a few things. This is best done with research and good old-fashioned, trial and error. Research is done by checking out the competition and understanding your buyer’s needs and priorities. Trial and error setting the price and seeing who buys. If you get a lot of buyers, slowly raise the prices. If you don’t get any buyers – lower the price. You might want to double-check your market positioning to make sure that you are in front of the ideal audience too.
Here are a few things to consider when pricing:
Cost of Goods Sold: This is everything that it costs you to produce the product or service that you offer. These costs change with the number that you sell. Don’t include your fixed costs yet. Those are costs that occur whether you sell 1 or 100. Understanding what it actually costs you to make your product or service can help you determine the lowest profit margin you can accept. You should also have an amount above the COGS you need as a bottom number.
What’s The Benefit To The Customer: This is really important to understand when setting your price. What problem does your offer solve? Is it a big, hairy one that they absolutely need taken care of now? Or is it something that they would like to have, sometime? The higher the need, the higher the price can be. Imagine you need your heart repaired, like life or death, price is never a thought. But when you are buying something, you’d like, you’ll shop for the best price and package. You also what to consider what the outcome is worth to the buyer. If your offer saves them thousands in time and money, then you can price it higher. See the trend?
What The Market Will Bear: Understanding your competition and the need of the customer will help you to set a price that the market will bear. The same concepts as above apply. There is really no winner in the raise to the lowest price. Smaller margins mean that you need to own the market share of volume to be profitable. The alternative is to be on the higher side. Customers will pay more for perceived value, higher quality, and status that name brands bring. It’s more favorable to be higher priced if your customers will pay it.
Pricing your offer can be a little tricky but with good insights, you can set an attractive price in exchange for a good offer. We at Infinite Profit help our clients to position their offer for the highest possible price while delivering the best solution resulting in higher profitability. This is just one of many strategies and tactics we help our clients with. We are happy to talk with you and share some ideas showcasing how you can boost your profit when you engage with us. Curious? Book a no-obligation call today.
Marcia Riner is a business growth strategist. Small Business Owners come to Marcia looking to exponentially boost their revenue and profitability without spending an additional dollar on marketing or advertising. In fact, she is able to show prospective clients a clear ROI to working with her before they decide to hire her. Don't believe it? Let her prove it to you in just a few minutes.
Marcia hosts a weekly podcast with videos on YouTube @ www.Youtube.com/profitwithaplan and audio @ www.profitwithaplan.com. She is constantly sharing business growth tips on all of her social channels @marciariner.
Marcia has created an incredible FREE webinar that will show you how you can boost your net profit by 45% in just 30 days. Go check it out while you can @ www.30dayProfitBooster.com