Deciding Price Strategy For Your Product or Service
As an entrepreneur, first thing you need to decide is your price strategy. Fixing right price for your product or service is major aspect of a marketing program. Considering some basic factors may help you in taking right decision in this direction.
- How do you plan to position your product in the market” If you are planning to market your products through a discount store, you will try to keep your prices lower than your competitors. On the other hand, if your product is an exclusive luxury item, keeping low price tag might hurt your image. The pricing must be consistent with the positioning. People strongly emphasize to the idea that you get what you pay for.
- Do some market research to find out acceptability of your product at a particular price. Work out demand curve at various prices to assess the best price for your product or service.
- Calculate the fixed and variable costs of your product or service. Ensure that your gross margin (price minus cost of goods) sufficiently covers your fixed overhead to get you acceptable profit margin. Many entrepreneurs under-estimate this aspect which gets them into trouble.
- There are other areas to be examined before you decide pricing your product or service. To get detailed information on this topic visit: