WholeLife Matrix: Financial Viability / Marketing
“The moment you make a mistake in pricing, you’re eating into your reputation or your profits.”
– Katharine Paine
Have you ever wondered about how you should price a product or service or whether or not your current prices are what they should be? The way that you set your prices can depend on factors such as the goals you have for your products or services or your business and lifestyle. Here are some tips for pricing your products and services.
1. Determine Your Goals
The goals you have for the product can help to determine its price. There are some products that you may give away at low cost or even for free to help your business to acquire new customers. Then you might have some products that you sell at an average price and some products that you sell at a premium price.
2. Calculate the Cost of Making Your Product
Finding the cost of creating your product will also help you to determine its price.
● Cost of Tangible Products
For tangible products, consider the costs of making and delivering the product such as supplies for making your product, customer service, shipping and printing costs. Also determine other costs such as the costs to maintain your website and rent. Calculate all of these costs in a spreadsheet to help you determine the final price for your product.
● Cost of Services
Pricing services can be more challenging than pricing products because you need to consider the value of your time, knowledge, training, skills, and experience in addition to the cost of supplies, software, and other business expenses. Once you have determined your breakeven amount, you need to determine your markup amount. To do this, consider the value of your service to your customer. Do you offer great service, a premium service or a specialized skill that only a few people provide? Your unique selling proposition will help to determine your price.
You also need to determine if you will be charging an hourly rate, offer package pricing, or a combination of both. In order to offer package pricing, you will need to know how long tasks take you to perform. You can list tasks in a spreadsheet and time yourself on how long they take you to do. This will allow you to create customized packages where you can mix and match services.
3. Evaluate the Marketplace
If you are unsure of what to charge for a product or service, you can get a general idea of what the market is willing to pay by looking at what your competitors are charging. Look at the high-end, low-end, and mid prices. You can also survey customers to get feedback on products and pricing. Remember that offering a higher priced product or service can actually be more beneficial in some cases than offering a lower price. For example, although fewer people might buy a higher ticket product or service, by selling higher ticket items, it is possible to make more money per sale than by selling many lower-priced items.
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