The year is not over yet until it is. There are certain things you can still get right with your business within the next three months, which will set you up for greater success in the future. One of these things is the price factor of your products or services. A lot of business people are out there, making connections and trying hard to market their products.
But one thing they could be doing wrong repeatedly is pricing. Product pricing is one of the most important aspects of your business that you must never look away from. Pay close attention to the processes, and you will be sure to make progress.
According to an article by Shopify, product pricing is “the process of determining the quantitative value of a product based on both internal and external factors”. It is the process of weighing and giving value to the products you sell. This must be carried out strategically to ensure that its impact on the business is purely positive.
Oftentimes, the problem is ignorance. We do not know how to go about setting a standard and efficient pricing structure, and this tells a negatively on our businesses.
So, are you a business owner interested in achieving better results as regards your product pricing? Then this article is for you. Here, I will be highlighting 3 effective ways to price your products.
Add the cost price
Your cost price refers to the cost of purchasing or producing what you sell. It incorporates the cost of raw materials, packaging, production time, shipping and other overhead costs incurred in the process of production. Before you price your products, calculate what it took you to get that product into the market.
Although you must have produced or purchased in bulk, you should calculate it in single units. This will help you know how to add up your profit. If this is not properly calculated, you could either be at a loss or be unreasonably profitable, which in itself does not speak well of your business.
Add a profit margin
As discussed in the first point, there is a need to get your cost figures right before you set your profit margin.
To set your profit margin, determine how much you will like to make in terms of profit. This must be according to the market prices. This is because you do not want to sell too high or too low when compared to the market price. So, do your research properly and find out the already accepted price structure for products in your niche.
Test and make adjustments
Most times, we don’t get things right the first time. There will always be a need to make tweaks here and there. Now that you have calculated your production cost and set a profit margin, the next thing is to price your products.
Start first. You will always evolve with time. A great clue will be the market price. Use this effectively. It will also let you assess whether your cost of production is unnecessarily high. Sometimes, in our bid to get quality, we go overboard. Inasmuch as it is important to deliver quality products, there should be a balance, so that at the end of the day, you will still make a profit.Featured Image Source: Techawk
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