Important factors to check before setting a price for your product and service
When it comes to starting a new business, price factor is an optimal thing that also needs to be considered. The price you set must neither be on a high side nor on a low side.
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Do you know that sometimes when the price for your product or service is too low, it might be regarded as a fake product?
Do you also know that sometimes when your product or service is on the high side, it might be regarded as being for only the high-classed?
How do we then get the best price for our products or service that will be beneficial to the entrepreneur as well as the customers?
Understand your product and competition.
When it comes to setting a price for your product understanding the product is very crucial, after the product is understood the next thing to look at is the available competition especially when it comes to rendering services. If the quality of the service rendered is lower than your competition, then logically your price is expected to be lower but if on the other hand you are rendering a service or a product that is of higher quality than your competition it is logical that you offer an higher price. The presentation of your product or service will make people either want to pay more or pay less for your product.
If you even want to win more customers over, you can decide to offer more services with a price as low as that of your competitions but you need to be certain that you are making profit in the process, do not offer a price where you are not making the profit you should be making.
Profit Generated.
During the period of setting your price, you have to understand that everyone cannot be your customer, it is possible to sell 100 items and generate $1,000 as profit and then sell 50 item but generate $2,000 as profit, consider the difference in the price range and choose the one you want depending on the type of customer base you want to build. On most occasions, start-up entrepreneurs tend to focus on the mount of sales made more than the total revenue generated at the end of the day. Remember that the major reason why you are going into business in the first place is to generate income, no matter the price you choose never forget to calculate your value of profit and loss at the end of the day.
Geographical location.
The area where your business is situated will determine the amount you want to place on your product and services, study your location before you set a fixed price. In certain geographical locations, people will not purchase items that are cheap and in other areas, people will not purchase expensive items.
This is really helpful.
Learnt so much from it
Thank you @emmanuel-pade, truly appreciate your presence.
I think there are also other very important factors that determine the price of a product.
One of them is the type of product and the profit margin also as it influences the taxes that you must pay according to the product.
Of course the type of a product highly determines the price, thanks for reading and dropping your view on the topic.
Really interesting points, I work in a candy store and my boss is always watching the prices, how much a product costs in her competition and in various supermarkets to see if they can be matched or simply improved. Of course always generating profits, it is important to know the product, the competition and of course the customers!
Price is a great determinant in business, it should not get too expensive neith we should it get too cheap.
Very valid points @busted 1, the geographical location of a business highly determines the type of people that will come to buy and the type of price that should be set.
Location is highly relevant, thanks for dropping your opinion it is highly appreciated.