Do you have a business, or are you looking to start a new business of your own? It’s exciting to start working for yourself, but getting started isn’t always easy.
Managing employees, making or sourcing your products, setting up a website: these are all things that can be stressful. Even if you work alone, you have to deal with time management, marketing, and figuring out how to set prices for your merchandise or services.
We want to help with one of those problems. We want to teach you how to price your products and services to get the most profit without making customers turn away. Keep reading to learn more.
Consider Your Costs
When you’re pricing your products or services you need to consider the cost of the product or service that you’re covering.
For example, let’s say that you’re someone who sells jewelry. You might buy that jewelry from a wholesale provider for $30 per piece.
You also have to consider the cost of doing business. How much does it cost to rent your storefront or keep your equipment up to date? How much do utilities cost?
If you have employees, how much do you pay them (or how much would you like to pay them)? If you work alone, what is your ideal pay-per-hour?
All of these things go into your personal costs.
Evaluate Desired Profits
How much money do you want to make? Everyone has goals in mind with their business, and these goals may be fluid. When considering your prices you aren’t trying to break even. You want to make some kind of profit so that the business is worth it.
If you don’t include the cost of doing business into your revenue you’re going to be in for an unfortunate surprise. Read here for more information on that.
Making a list of earnings goals over time will help you here.
Study Your Competition
Let’s face it, your potential customers won’t come to you if your prices are high above the competition, especially if you’re a newcomer.
While your services may be just as good or better as the established competitors, there’s no reason for a potential customer to come to you if they can get the same product or service elsewhere for a more affordable price.
This gives you several options: lower your price or make your product stand out.
If your product already stands out, try to aim for the median prices with consideration to the competition. You don’t have to be the most affordable and branding yourself as “cheap” can be harmful. Aiming for the middle makes you look more trustworthy and can get you more business.
Be willing to adjust over time.
Do You Know How to Set Prices?
Learning how to set prices for your products or services is an important part of starting a business. You don’t want to sell yourself short, but you also don’t want to drive potential customers away with scary prices.
With research and these pricing tips, you’re well on your way to finding the perfect price point.
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