What’s the best way to establish a price for your products or services?
Getting your pricing right is crucial. Put your prices too high and your customers may desert you; put them too low and you’ll generate sales but won’t have a large enough profit margin to create healthy revenues and cashflow for the business.
Whether you’re a new startup, or an established business, choosing the right pricing strategy is a fundamental part of designing your business model. As such, pricing is something that’s likely to take considerable thought, research, planning and analysis over the lifetime of your products.
So, how do you know what to charge for each product and/or service? And how do you decide a price point that’s both competitive AND profitable for the business?
Costs, margins and hitting the right price point
For your business to be viable, you have to know for certain that you can:
But how does this all come together to define your final sale price? The answer is to have a granular understanding of your costs, your margins and your pricing – and also to know who you’re selling your product/service to.
Let’s look at the different ways that a price can be worked out:
Pricing is a complex and difficult area to get right, so working on your pricing is something that should be done on a regular basis.
If you’d like to review your current pricing strategy, please do come and talk to us. We will analyse your current strategy, review your prices and margins, and suggest the best way to improve your price point, revenues and profitability.