Getting your pricing right for your product or service is hugely important. This is probably something you want to get good advice on. Any stories to share on how you set your pricing? Have you had to listen to the market even when you’d like to raise your prices?
The only way you really know is of course if your target audience is buying it. Setting the price can be a little bit of trial and error. First, you want to make sure your margins are right – so ensuring you capture all your costs right is step #1. Then once you’ve landed on a retail price which has enough fat for distributors/retailers etc., have a look at what your competitors are doing. Almost all businesses have competitors – it just might look like a different way your customers are solving their problem. See where they are landing.
Then, ask your consumers. Whether you already have a following, or you just know where they lurk, describe the product/service and the value they’d get, and see where they land.
One thing to keep in mind is perceived value. There is a whole lot of psychology in perceived value - it’s fascinating. Pricing is not just about covering costs; it’s also about what your product or service is worth in the eyes of your customers.
Ultimately, the biggest test is putting it out there and seeing what happens. But if it doesn’t sell, it could be so many other things beyond price; you could be marketing it badly, it could be positioned wrong… I could go on! Also, remember that pricing doesn’t have to be set in stone. As you learn more from your customers and the market shifts, you can always adjust pricing, whether through tiers, bundling, or slight changes to keep up with demand and costs. And yes, you can increase your pricing - the saying ‘you can go down, but never up’ definitely isn’t true. Particularly if you are transparent about it.
Interesting, thanks for this Brianne. I know there are pricing consultants who help businesses make their pricing decisions. Our Telescopicgoal entrepreneur, Tom Mackenzie, who we wrote about last week (you’ll see in our articles on HOW:TO) is taking a leaf out of James Dyson’s book. Good people pay for high quality is the way Dyson sees it.