9 Factors to Consider When Determining the Best Price for Your Product or Service

Determining the right price for a product or service is one of the most important elements in the business success equation. If the price is too low, you will lose well-deserved profits, but if the price is too high, you will lose clients and potential customers. There are several factors to consider when determining a fair price for a product or service. To share insights into what these factors are and why they matter, nine professionals from the Young Entrepreneur Council (YEC) answered the following question:

“What factor should be considered when determining the right price for your product or service, and why?”

Here’s what they recommend taking a look at first.

1. Your ideal margin

“Understanding gross margins is critical. Knowing the ideal margin and benchmarking performance across the board will help you assess which products or services should be increased or decreased. You may need to raise prices or lower costs on products that are not positioned sufficiently. Justifying cost of goods sold is Depending on the product or service you are selling is critical to increasing overall profits.” ~ Jennifer A. Barnes, Office of Optima, Inc

2. Competing offers

“When we launched our SaaS product, we first did the research to see what price our competitors were offering. That gave us a base price to start selling. Within four to six months of selling, we learned what our customers were willing to pay and what it would cost to buy. We adjusted the price based on customer input. And the cost of selling. It takes a few times and attempts to find the right price.” ~Pyush Jain, Cymbal

3. How much are you willing to pay

“When pricing your product or service, ask yourself how much you, as a customer, are willing to pay. Your target audience will fit into a particular segment, so estimating the value of your product is critical to selling success.” ~ Jared Atchison, WPForms

4. Total costs

Consider the total costs. Obviously, there are soft costs for labor and materials, and hard costs for things like rent, utilities, vendor subscriptions, and marketing. But, you also have a cost to you or your workforce to carry out this deal, versus other opportunities. Take these costs, add the margin, and set the price. You will find that you are more confident in your rates and points away.” ~ Jonathan Sparks, Sparks Law

5. The value that customers will get

“The key factor in pricing your product or service is the value or set of values ​​that your customers will have. It is simple: more value means higher price that your customers are willing to pay. But the difficulty lies in objectively and correctly determining and evaluating the value of the product. A step in the product development process. ~ Maxime Bibisch, SpdLoad

6. What the target market can offer

“Aside from calculating all costs and profit margin, be sure to consider what your target market can afford and what they are willing to pay. Customers have an idea of ​​the value of the products. If you’re going to charge more than your competitors, you need to show how much you’ve improved — or find a market they’re happy with. Pay more, like buyers of luxury goods and services.” ~ Kalin Kasapov, ProTexting

7. Ongoing support and repairs or upgrades

“The important factor is whether your product needs constant support, repairs and upgrades. In such cases, you can avoid charging a high price by adopting a subscription model. It gives your audience the ability to pay on a monthly basis and for you to continue to develop your product and provide support to help your customers” . ~ Syed Balkhi, WPBeginner

8. Customer emotional connection

“Aside from knowing the costs associated with your product or service, you need to understand your customers’ emotional connection to the product or service and where they are throughout the buyer’s journey. Consumers will spend more when they have a connection to the product or service or when they reach the decision point during the buyer’s journey.” ~ Jared Weitz, United Capital Source Inc.

9. The type of audience you will attract

“When determining the right price for your product, it is important to remember not to sell yourself short. Too many business owners make the mistake of underpricing their products and losing ROI and additional revenue. You may think you will earn more with lower prices, but you also need to think about the type of The audience you attract at your price point.” ~ Stephanie Wells, awesome shapes

Photo: Depositphotos

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