Whenever you have a new product, you should think about the price structure. Having a competitive price is important when you want to break into a market; the wrong price can tank your product. That is why before and during your product’s release, you should be working on your pricing structure.
Here are a few tips to help you ensure that you are doing things right:
Know What Your Competition is Doing
When you sell something, unless you’re alone on the market, you will need to know how your competitors pricing their products or services. Price tracking services make this job rather easy. Just subscribe to them and you’ll have daily updates on what your competition is doing with their prices.
This doesn’t mean you have to undercut the competition regularly; it just means that your price should be fair for the value that you give. For example, if your product is more expensive than your competition, you better be sure that your product offers more to your customers.
Think About Exceptions
As the main source of a product, you have the privilege of giving out discounts. This is a great move since it allows you to sell more to retailers. With more product at retailers, your primary customers will have better access to your product. The problem is that some retailers can start asking for too many discounts.
You should have a dedicated exceptions “desk” that will work with retailers about their discounts. It will keep track of all the discounts that you offer, help with negotiations, and even inform retailers about the current discounts on offer.
Consider Customer Input
The other half of the equation for pricing is connecting with the customers. Remember that as long as many of your customers are willing to pay for your product, it’s a decent price. The key here is understanding how much your customers are willing to pay. To know this, you need to do customer surveys and get their feedback.
In addition, you should track the sales performance of the product. Several services and products allow you and your team to gauge what is the sweet spot for selling your product.
Gauge the Market Conditions
Pricing is dependent on the market. Supply and demand are the masters of the market and you need to be able to respond to them. If your product is in high demand and you are one of the few suppliers, then you most likely can get away with a higher price. However, with low demand or a large amount of supply, you need to lower your price.
Re-evaluate Continuously
Your prices should not stay static. Keeping track of various factors in pricing, you should lower and raise your prices when necessary. In addition, your company may develop processes that could lower your production costs or change your bottom line. This can mean you can afford larger discounts or even a price drop so that you can reach more customers. It’s up to you to decide whether to pull the trigger on the change in price.
The price structure of your product must be competitive on the market. If you do it correctly, your product will have the chance to be noticed in the market. Remember the tips above to ensure that your business will be able to grow and prosper.