Pricing your products/services is not only a key to your sales success but also for the health of your Startup. Both high and low prices than optimum will hurt your business. High prices in the beginning may throw you out of the game, and low prices will cost you more. So you must charge enough to make a profit while being in the game. A well thought-out pricing strategy takes some effort but is worth the time spent.
Your pricing strategy depends on the following key factors,
- Your pricing should take into consideration the demographic cohort/group you are targeting with your products. So if you are targeting college students with your cool t-shirts, your price range should be lower than that of designer tees so that college kids can easily afford. It’s advisable that you do a survey so that you can keep competitive prices and still make profits. Remember ‘Client is the king’ and therefore price accordingly keeping your clientele in mind.
- Prices are also dependant on the place or region. Metros and cosmopolitan cities usually have higher prices for consumer goods than rest of the country. Your pricing strategy should take in account where you want to market your products. Price discrimination is fine if you are not planning a country-wide release of your product. If you do, then you can plan on bringing out variants of the product to suit different markets with different prices.
- The technology that you use for your products also is a key factor in determining your pricing and hence profits. You have to keep abreast with the latest production technologies in your industry and make a judicious choice based on your size of production, accessibility to capital, and your benefit-cost ratios.
- If you get into a price war with a direct competitor whom you can’t beat, then try to value add in your existing product to differentiate and adjust your prices accordingly.
You need to continuously monitor prices of your direct and indirect competitors to have a level playing field and for keep growing your business.