Product Pricing: Price your product or service

How to build a Product pricing strategy

In many markets, a high price contributes to the perception of the product as being of premium value. The perception of your product or service is important.

Will this be the image that will get customers to buy from you? Are your customers more price-conscious? If so, you can build in some pricing tactics.

Find out what competitors are doing. Phone your rivals and ask them for a quote. You can use this information as a framework.

It's probably unwise to set your prices too much higher or lower without a good reason. If you price too low, you will just be throwing away profit. If you price too high, you will lose customers, unless you can offer them something they can't get elsewhere.

It can be useful to charge different prices to different customers, eg to customers who purchase repeatedly, or buy add-on or related products, as a thank you for their loyalty.

Customers who are expensive to satisfy will be less profitable, unless you charge them higher prices. One-off sales may cost you more than repeat business.

Decide which pricing method is best for you - cost-plus or value-based.

Make sure your prices cover your costs and can deliver a profit. Leave yourself some room for change if necessary. You can always change your prices, but it's wise to think carefully before you do

Crown Copyright © 2004-2011