How To Price Your Product

If you are able to set the right price for your product, you’ll maximize your income. But if your price is wrong you can succumb.

You have to sell your product for more than it costs you to make. Your profit is the different between the cost of production of your product and the price you sell it. The customer buys it because it is worth more to him than the money he paid for it.

Therefore if your customers like your product and are satisfied everything is ok, but if your customers are unsatisfied then you’ll have a hard time and you’ll risk to fail.

What is the right price for your product?

Before even thinking about to set the price for your product you have to define what kind of business you want to build.

1. Low Price: It is a Long Term Strategy. You set a very low price for your product with the objective of entering into the market and get a position in it quickly.

It allows you to acquire a huge amount of customers in a short period of time. As your price is so low the only way you have to make more money is having more customers.

Also, you do not have to worry about your competitors because many people will buy from you due to the low price.

There is one thing that you have to keep in mind, and it is that you have to keep those customers. If you made a great product, your customers will buy from you again and here is where you increase your profit.

You use the funnel method, it works in the following way:

You offer a first product at a low price for example $9.95 or for free if you want, with the objective of acquireing customers, you build your list.
 
Then you offer a second product at a higher price for example $27.95. You continue to offer more products always increasing the price.

You have to know that each customer has a lifetime value, it means that customers are not forever.

If you use this strategy you need patience because you are not going to make a lot of money quickly, but you could dominate the market and at the end of your customer’s lifetime you could have made a huge amount of money.

2. High Price: It is a Short Term Strategy. You set a high price to make a huge amount of money quickly, but only a few people will buy from you due to the high price.  

There are people who think that if the price is high then the product is good. Also, some people want exclusive products and don’t care about the price.

One important thing you have to know is that a high price can attract competitors. They can create a similar product and offer it at a lower price.

You can apply this strategy when you offer a coaching program. You set a high price to have only a few clients and work less making the same amount of money than having more clients paying less.

Setting the right price for your product is a complex task. Never try to guess the price of your product. You have to know the market. Go to your prospects and ask…Prepare a survey based on your product and price.

Your prospects will tell you how much they are willing to pay for your product depending on the quality of it. It is important that you survey your target market.

You can test different prices during the pre-launch. You can offer your product in a forum using the special offer, then you offer it in another forum, targeted newsgroup or any place where you won’t be accused of spamming  with a different price and you analyze the results.

The bottom line is to make a high quality product. Your customers must profit from it.

Thanks,
PV

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