3 stradegies about how to price your product
Conclusion: if your product is better because
1.) have been painted. Your product is unique. Your product is original...
2.) location: the futher you are from the imported place the most price you can get...for your product . Exemple Houston, the beach Galveston or the nore of United States
3.) your product has a character is indiviual well made
These are some of the reasons why your product has more value
and you are getting more for your money...www.Westwoodpavillion.com
see products http://westwoodpavillion.com/sales-value/
These are just few of the products we carry....
1.) Stradegies about how to price your product
Using an effective pricing strategy can be the difference between a hopping business and a dud. You've already done the work to come up with a killer product and an unforgettable hook for your business, so now you just need to price it accordingly. Learn to determine your overhead, raise and lower appropriately, and use promotional pricing to your advantage, and you'll be in the black in no time. See Step 1 for more information.
Part 1 of 3: Determining Overhead
1Calculate the cost of running your business. A basic pricing method requires that you determine the full cost of running your business and price your product in such a way as to keep your business in the black. So, the first thing you need to do is calculate how much it costs to run your business. Add up your:
- Marketing costs
- Manufacturing costs (cost of raw materials, equipment, etc.)
- Operating expenses (including rent on your building, utilities, etc.)
- Debt service costs
- Return on any investment capital
- Your own salary
2Set a "success point." The only reason to start a business is to make money, and specifically to make enough money to keep the venture a successful enterprise. For this reason, you need to set a point at which you would consider the business successful, your success point, and add that figure to your expenses to determine how much revenue you need to generate from sales.
Once you know how much money you need to make for the business to be successful, then you can start getting some sense of what a successful price would be for your product.
3Anticipate your customer's desires. Another major figure you need to determine is how much merchandise you might reliably sell in a given period. Identify your customer base and their buying tendencies. How much do they desire your particular product? Is there a demand for it? Be as specific as possible in your discussion of numbers. How much is it possible to sell, given your current resources? How much do you need to sell to maintain the visibility and success of your current model? What might need to be changed?
Divide your success point by the number of units you think might be reliably sold to determine a price guideline, per unit. This isn't necessarily to say that this should be the price, but this is a good number to start experimenting with and seeing how your customers will respond.
4Study your competition. If you sell custom-made iPhone cases, are there other companies that provide similar services? Where? How much do their products cost? How is their company run? You need to learn everything you can about your competition so you can learn to differentiate yourself from their model to get your share of the common market.
Say you're one of two frozen yoghurt stands in your town, and you can't figure out why your $7 a cup (cheap for the ingredients!) organic coconut rosemary kefir isn't bringing in the masses, while the "Tastee Freeze" across town sells regular chocolate cones like it's going out of style. You need to be familiar with their prices and their customer base so you can stay competitive and stay relevant. Do you share the same customer base? Is there another customer base you might tap into and market to, to make your business more viable? Is anyone ever going to be willing to pay your prices? These are important questions for a successful business to consider when pricing.
1Understand the effects of over and under pricing. Setting the price inefficiently will have marked and measurable effects on your numbers, and you need to learn to recognize the symptoms of having either a low or high price point and knowing that you need to make a change.
- Underpricing is often done by companies who want to sell a higher volume, expecting that the customer will assume they're getting a deal, especially in a down economy. Doing this, however, can give the impression that the product is "cheap," not that they're getting their money's worth.
- Overpricing may drive your customers elsewhere. Especially when you're trying to get your feet on the ground as your business gets started, it can be tempting to set the price too high. The investment of starting a business can be scary and you'll probably want to start covering costs right away, but consider the customer's point of view. Setting it at a point you'll make money will only work if people are willing to pay for it.
2Keep a close eye on your pricing and your budget. Monitor your profits and prices at least monthly. Break down every product so that you know how each contributes to your overall profitability month-to-month.
- Talk to your customers and listen to their feedback. Take it to heart. If they enjoy your product but complain about the price, you might consider making a change.
- Develop a budget plan. Try to focus on a long term strategy that will result in making the business profitable. This might not involve making drastic changes right away, but slowly moving toward an overall goal of profitability.
3Raise prices slowly and incrementally. Jumping from selling an iPhone case for $5 to selling one for $12 will undoubtedly lose you customers, even if the price change is right for the business and a smart move. Instead, raise it incrementally and spend time advertising the product's benefits and advantages, as opposed to apologizing for the increase. Treat it as a benefit, rather than an inconvenience.
- Sudden increases will look like desperate moves made by a struggling business, which may or may not be true. You want to avoid the impression that you're raising the prices because you need to make more money. Rather, you need to make it seem as if you're raising prices because the product is just that good.
- Watch your sales volume immediately after making the change. If the move was too sudden, you'll see a negative change, suggesting that you need to do more to sell the new variation on the product and justify its price.
4Use promotions to lower prices and get people in the store. Unless your competition is lowering their price, or you're just not getting the kind of traffic in your business that you need to make it profitable, you generally want to avoid lowering the price. Lowering the price suggests another kind of desperation--that people are avoiding your store--something that you really want to avoid.
Use discount tactics and promotions rather than lowering the price all at once, or by altering the amount that someone gets for the same price. This was commonly done by candy bar companies in the mid-2000s, making the size per unit smaller but keeping the unit price the same.art 3 of 3: Using Promotional Pricing Strategies
1Use creative promotions to get people in the door. Pricing to promote a product is a very common application, giving the consumer the impression that your business is a place to go to get deals, even if you're not always giving them deals.
- Use a Buy One, Get One Free promotion to get people interested in your product and ensure that they'll be struck by the deals they're getting. If you can keep them coming back, even when you're not holding promotions, they'll be hooked.
- Often sellers will bundle several products in the same package, moving old or unwanted stock by creating killer deals. Dated DVDs, CDs, and video games are often sold using the bundle approach.
2Appeal to your customer's emotions and rationality. A common business strategy involves pricing items in .99 cent increments, rather than dollar increments. At a glance, the difference in savings seems huge (even though it's non-existent, practically). Pricing judiciously will help you keep sales high without changing your strategy considerably.
- Consider creating a "Premium" package to up-sell customers on moderately "improved" versions of the basically the same product, but with more sophistication (i.e., more marketing).
- Consider establishing a "line" of products, with varying levels at which the customer can engage. Car washes will often use this pricing strategy: A basic wash could be $2, wash and wax $4, and the whole package $6.
3Try up-sell promotions to move more merchandise. In Optional Product pricing, companies will attempt to increase the amount customers spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example, airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.
4Avoid the appearance of price gouging. Gouging involves raising your product to a high price because you have a substantial competitive advantage of some kind, or a corner of the market. This advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply.
- Captive Product Pricing is used when products have complements. Companies will charge a premium price where the consumer is captured. For example, a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.
2.) Another stradegy to how to price your product
A Simple Formula for Pricing Your Work
Imagine this: a beautiful jewelry studio, a soldering station, an anvil on a nice old worn wooden stump, a handmade jewelry bench, and on top of all this lie piles of finished pieces. Behind the bench sits a jeweler who has yet to sell a single one of her creations. What’s holding this talented artisan back? From my years of listening to your stories, putting a price on your work is one of the most intimidating first steps to selling, and delays many from opening their shop. I’m here to share my favorite pricing formula with you, and to break it down so you have the confidence to get out there and sell!
Know the Formula
Here’s my favorite formula:
Materials + Labor + Expenses + Profit = Wholesale x 2 = Retail
I picked this up from the amazing Megan Auman. What I love about this formula is that your profit is properly accounted for!
Now let’s go through every part of this formula and break it down.
Make sure to cover all your material fees. Often forgotten: the little things like the cost of thread, and the bigger things like the cost of packaging. If you’re going to “guesstimate,” err on the higher side!
If someone wanted to hire you and they offered you $7 an hour, what would you think of that deal? Be a good boss to yourself and do a bit of research. How much does a seamstress make in San Francisco? Find out! (Also remember, you’re probably more than a seamstress – you are the designer, the marketing department, the accountant, the janitor, and the administrative assistant, too.)
Bubble wrap, that ebook purchased at 3 a.m., studio rent, bus passes required to make it to the studio every day, a new scale for your shipping station. How the heck can you fit all these things into the price of a single item?
Here’s a way to do that:
- Jot down every expense you can think of — for example, include your Etsy fees, office supplies, rent or utilities.
- Next, come up with the number of items you’d like to sell a month. Divide that number into the total expenses.
Tip: Start doing two things to help you come up with an even more exact price:
- Track your expenses carefully so you can come back to this as you learn more about selling! I suggest trying out Outright – a free online accounting tool.
- Start figuring out the big investments. How many items can you get out of that sewing machine? How long will that postage printer last before it needs to be replaced?
Think hard: where do you want this business to go? Do you want to quit your day job? Do you want to pay off a student loan? Accounting for profit now will help you get there. This number really depends on what you are selling, and will make up for someone like a printmaker, whose material costs are low, labor hours might be low, but should be paid for their unique talent and point of view! I leave this up to you. I’m trusting you here — don’t disappoint me with a low ball number!
Bringing It All Together
All right, this gets us to our wholesale price. Some of you might wonder if you can use the wholesale price in your Etsy shop. Wouldn’t this be a a great way to offer your work at an affordable price? No, no, no. Here’s why I’m going to beg you to double your wholesale price and sell your work at a true retail price:
- Selling your work at a wholesale rate undervalues those who price their work at the proper retail price. When the majority of sellers in a category price their work thoughtfully, the entire category benefits.
- Customers will wonder, “Why?” Why is your work so much lower than everyone else? Is it because it’s not handmade? Is it because you’re using cheaper materials? Your price tells a story: make that story a good one!
- You’re putting yourself at a disadvantage. Let’s say a big catalog reaches out to you and says, “We’d like to buy 100 of these items! Please let us know what your wholesale prices are.” This is a big opportunity; an opportunity you can’t afford to take.
Did you just come up with a price that you are sure the market won’t respond to? Here’s the trick: if the item is priced too high for the market, it’s not the price you need to alter, it’s the design or the way you produce your work. Get creative and see how you can adjust the item to reduce your costs. Can you buy your materials discounted in bulk? Can you produce the work in multiples, reducing the labor? Don’t take the easy way out by slashing your prices.
Remember, the right prices will allow you to reach your small business goals
3.) ONe more stradegy about how to price your products