5 Steps to fix the price of a product or service

5 Steps to fix the price of a product or service | tinobusiness
5 Steps to fix the price of a product or service | tinobusiness

Set the price of a product or service can be as complicated as to sell. How to charge what they really worth?

There are few employers who, at some point in their venture, they question whether they are suitable for charging the product or service. Many of them establish a subjective value without performing a detailed analysis of product benefits. This becomes even more complex if it is an innovation in the market. One of the strategies used by entrepreneurs to give value to their product is benchmarking, which is nothing more than analyze the competition and the prices of substitute products.

 

However, that same competition generates a constant myopia entrepreneurs, who tend to focus on the product price, but not the added value thereof.

I explain. One day, while advising a provider of technology services company, the manager told me he wanted to offer the same price as the competition. I asked “what competitors offer?” And hHereplied that a specific location service. At that time understood that his company offered a completely different from his competition, which only offered location added value. Moreover, in real terms, the company could generate savings exceeding 10 percent in transportation costs to their customers. The reflection of that day was that no matter the price of the competition provided an added value higher than the bid rivals. Therefore, we decided to eliminate the price as the main actor.

The price is a variable that can take the purchasing decision; however, many times the added value given to the products or services can increase it, so that is elastic and flexible for consumers.

 

To fix the price of a product or service it is important to follow these 5 steps.

1. Make costing your product or service, integrated fixed and variable costs (fixed and understanding leasing, payroll, supplies, etc.).

2. Internalize your salary in the price . Many entrepreneurs fear assess their salary, but remember: your business is not a non-profit organization.

3. Identify substitute products or services in the field of your company. This will allow a more detailed analysis; takes this as a parameter, not as a rule of thumb.

4. Identify the added value offered by your product or service. What makes it truly unique?

5. Communicates well the benefit of your product or service. Ask yourself why customers should buy? When you have that answer, customer through the packaging.

I have had the opportunity to develop more than 100 business proposals. I have learned that more than the price of the service, how important is the added value thereof.

However, not enough to have an added value: it is also key to convey its benefits in the short and long term. The price of Starbucks cappuccino is higher than that of Juan Valdez. However, Starbucks not only offers a cappuccino: offers a different shopping experience, add value to coffee; as an example.

 

The following videos below will give you more details and I suggest you to watch them.

 

 

is strongly seasoned and hard-working Graphic Designer with extraordinary creative thinking and project design abilities. With 7 years experience in print and digital, including art direction, web/mobile design and consultation, illustration, packaging and copywriting/editing for clients in fashion, pharmaceutical, furniture, automotive, food & beverage, design, hospitality, financial, broadcast and NGO. I love sharing ideas and writing articles.

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