Startups which don’t know the value of your product and price their product often frizzle out in the market. The price of the product depends on the supply of it and certain demand of it. Demand increases as price goes down. But things are not this simple. When you are bringing something new in the market, you have to be extremely careful while deciding the price. It should be your priority to get the price element right, at first go itself.
Keep the following factors in mind while pricing:
What is the material cost of your product?
This includes the amount of money you spend on raw materials. Whether you are manufacturing a product or creating a product online, you must exactly know the various material costs incurred in the process. For example in manufacturing a product you might incur expenses on tangible materials, while in developing the software you might have to pay license fee.
Know the Labour Costs
It includes both the wages paid to workers and numbers of hours required to make the product. If the price is kept too low, you might not be able to pay the salaries to workers and get through the cost of the product.
The Overhead Cost
We have often heard people saying, try to keep the overhead cost as low as possible. Overhead cost can be everything from web hosting to phone bills to electricity bill. Keep in mind these overhead costs while pricing your product.
Respect the Industry Price
If your product is priced significantly low or higher than the market price, you either will have to change the price or alter your profit expectations.
Never forget the price of your product also influences the perceived value of your product. People tend to believe that higher priced product is better than the low valued product. So price often serves as the proxy for quality of your product.
One can never be sure about the customer wants, try delivering various products at similar ranges. If necessary let the customer decide the price of your product, this way you get the feedback too.
Know the pinch pint of your product and make them emotionally compelled to buy it.
What about Decoy Pricing?
Have you ever thought about McDonalds economical meal? Why do they offer more of food at comparative low price? That precisely increases their sale. Decoy pricing might be a suitable option for your product too.
If you wish to be more careful while pricing your product, you can seek advice Startup Indian Consultants and give your product a kick start.