Your store pricing can make or break things. It is one of the factors that affect how well your store performs as well as the profit you make by selling the products.
Hence, in this blog, we share insights on how you can strategies expenses, and finally set the right price for your product. Read the article to the end and you will get a surprise from us.
1. Assess your product cost
The total amount spent on the product is your product cost. For example, if you are selling a customized product online, you’re going to assess the cost that you have paid for the product. But there are other expenses as well.
Printing Cost or Designing Cost
Products that customers customize, which leads to printing or designing cost. Whether you are outsourcing or creating your own designs, divide the price you pay to designer with the number of products, or calculate an hourly rate for your own work and then add to the product.
Warehouse and shipping cost
You must keep an eye on the warehouse and shipping costs. Calculate the cost and divide them with a total number of units. Free shipping can boost your sale, but it increases your cost as you have to cover the shipping yourself.
2. Choose a product pricing strategy
Once you know the proper cost of your product, then you can plan your pricing strategy. Below are some of the most fruitful pricing strategies for the long term.
Cost + Pricing
Cost + pricing is the simplest strategy out there that many businesses follow. The formula is the cost of Product + Profit Margin = Retail Price.
Market or competition-oriented pricing
Pricing can give you a winning edge over your competitors in the cut-throat competition. Pricing has a big hand in influencing the customer for the purchase.
Pricing above market average- You can do this by enhancing your customer’s shopping experience by providing gifts, special messages, offers, and high-quality products.
Pricing the same as the market- A safer area to play with that capture a large audience and lets you make a profit.
Dynamic pricing
In this pricing model, you can determine product prices according to the demand and seasonality, which leads to change prices frequently. To know more about it in detail you can join this FREE webinar.
3. Skimming Pricing
The highest initial price that company changes for new or innovative products that may not easily available in the market is known as skimming pricing strategy. As the product gets old or easily available in the market then the company lowers the price of the product to attract more customers. The price drops as the product matures and other products or services are also available at lower prices. A good example of this is mobile companies, whenever they launch a new product at a higher price and gradually decrease the price as they get older.
4. Gain Market Share Pricing
In Gain market share strategy, the price of the product is kept low to attract the customers of the competitors. Low prices can eat your profit, but there are some good reasons to follow this strategy. The company can lower the price of the product, which costs them low. Once the customers are attracted to your company you can sell more profitable products or services to them. But be careful in underpricing your product it can generate insufficient profit. Sometimes customer thinks that lower price product might be lower in quality, so it is recommended to lower price strategically.
Conclusion
These are some pricing strategies that help you decide the price of your product. And now that you have got tools to decide prices for your product, its time to get on work.
