When it comes to product pricing, it’s really hard to comprehend where to begin. My suggestion? Start with a clean slate. You may have other products that you have priced in the past, however that does not mean that this product will be easy to price or that you should keep within the same pricing structure. Here are a few tips to help you price your product confidently, while staying true to yourself.
I’m someone who loves to see how human behavior influences things like consumerism, the economy and product selection. As online retail continues to pop up all over the world, similarities in pricing or copycat pricing has the ability to hurt your bottom line. One of the best places to start when dealing with product pricing is establishing a baseline.
Ask yourself these few key questions:
- What is my customer willing to pay?
- Should I add different price points?
- Can I adjust my prices later on?
- Will my product have a short life?
- Why should the customer pay more?
Establishing the impact your product will have on the market place is a great way to see if your product will live long or if interest dies off quickly. Another consideration of the above questions is how your business affects your pricing. When you created your product how much overhead did you create? Are you out of pocket any funds? What do you think your return on investment (ROI) should be? These are some good questions to consider, but PLEASE do yourself a favor and ask these questions before you even begin to create your product. Ultimately the only thing that matters is the perceived value your customers put on your product. Don’t think you can justify a high price point because you need to hit a certain ROI metric. The customer can care less how much it cost you to produce it…they will determine how much the content is worth to them, so have a good sense of this value before diving into your product. This helps with considering price points, but also helps in setting your budget for development.
Experiment with your pricing. There is nothing wrong with split testing your pricing with a few groups of people to help determine what people are willing to pay. Here are some ideas on how to find the right price by experimentation.
- Offer a certain amount of products at a base rate and increase as more are sold. You could approach your audience to let them know they are getting the best deal and as every 10 products are sold, the price will increase. This will immediately show how well your product is received as well as how much people are willing to pay for it.
- Price your product in bracketed pricing to quickly determine if the higher range is accepted. If you think your product is worth $200-400 then try offering it at $397.00 and see how it goes.
- Try the power of the number 9. It’s something we see every single day. Prices that end in 9 are thought to invoke an idea of “less” or more affordable than the rounded higher number. Try out this psychological approach to pricing and see if it holds any merit. You might also consider the number 7 which has been seen as a rising trend in several online communities.
One very important thing to remember when pricing your product is to never base your price off self-doubt. If you are new to marketing or this is the first time you are selling a product, go into the process with confidence. This process will help flush out and pinpoint a product price that you and your consumers are comfortable with.