How to price a product
Pricing is fundamental to any business
In thinking about how to price a product, it can be hard to work out exactly what to do. Of course you need to be mindful of the competition, making sure you articulate why your product is superior.
But be aware that we don’t always shop on price do we? I know that may sound counter intuitive, but consider this scenario to illustrate my point.
Imagine you need some new tyres for your car. Now there is a myriad of different tyre combinations, none of which as far as I can see every have a RRP that is stuck to! So how do I decide?
Price might well be an important factor, as I know how I drive, the typical road conditions and the likely speeds too. So I probably go for a mid range tyre, thinking they will be good enough.
Now change the scenario ever so slightly.
What if I am now looking to buy some tyres for my daughter and her first car? Am I going to any chance at all as to the quality of those tyres? I want the tyre with the best grip, shortest stopping distance and every other factor I can think of. Price is suddenly completely irrelevant, isn’t it? What I want is the best quality I can afford, and one way of judging that is by price.
Think of this example as you work out how to price a product.
Price a product
There are some key issues and principles you can follow if you are selling a product, as explained here by the online company Sumo. It’s an interesting read: How to price a product
Also worth reading our in-depth look at the impact of discounts on your bottom line here: The impact of discounts on profits